Here is how the naira performed against the United States Dollar in the black market for this month of February, 2017.
The naira began the month on a disappointing note, but ended the month on a stronger end.
United State Dollar Exchange Rate – USD Rate to Nigeria Naira Exchange Rate – NGN rate in black market:
Date: (Usd/Ngn) BUY / SELL
28/02/2017: 425/ 440
27/02/2017: 435/ 445
24/02/2017: 440/ 450
23/02/2017: 485/ 495
22/02/2017: 493/ 502
21/02/2017: 512/ 518
20/02/2017: 515/ 521
19/02/2017: 510/ 516
18/02/2017: 510/ 516
17/02/2017: 512/ 518
16/02/2017: 507/ 514
15/02/2017: 505/ 510
14/02/2017: 503/ 508
13/02/2017: 502/ 506
10/02/2017: 500/ 503
09/02/2017: 496/ 502
08/02/2017: 494/ 500
07/02/2017: 493/ 497
06/02/2017: 493/ 497
03/02/2017: 492/ 497
02/02/2017: 493/ 497
01/02/2017: 493/ 497
The Nigerian naira is the currency of Nigeria. The Central Bank of Nigeria (CBN) is the sole issuer of legal tender money throughout the Federation. In 1973, the naira was replaced by the pound at a rate of 2 naira = 1 pound.
Economic and currency experts have expressed divergent views over the outlook of the naira this year.
While some said the naira would experience further decline at the parallel market this year, others said the volatility noticed in the exchange rate last year would not continue this year.
A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said the naira would continue to depreciate at the parallel market while the CBN would keep managing the official rate around 305/dollar.
According to the Chief Executive Officer of the Financial Derivatives Company Limited, Mr. Bismarck Rewane, the naira would depreciate to N520/$ at the parallel market this year.
An economic expert, Henry Boyo, equally predicted that the naira will hit 1000/dollar on the parallel market this year if the Central Bank of Nigeria fails to review its monetary policy framework.
In the opinion of Mr Wale Olusi, an economic analyst at Afrinvest, a Nigeria-based research and investment advisory firm, the planned interest rate increase by the United States Federal Reserve Bank would lead to a stronger dollar.
Olusi said, “The US Federal Reserve Bank has made known its intention to increase interest rate.
“We see a stronger dollar coming from a higher interest rate environment.
“If the CBN continues with its exchange rate policy thrust and the Presidency keeps fighting devaluation, we see the naira declining further above 500 to something near 520 this year.”
However, Nigeria’s central bank took a step nearer to outright devaluation of the naira currency on Tuesday, providing 23 commercial banks with a combined $370.8 million at forward exchange rates up to 15 percent weaker than the official rate.
On Monday, the central bank effectively devalued the local currency for private individuals, who account for about 20 percent of total foreign exchange demand in the country.
On Tuesday, it said it sold dollars using one- and two-month forward exchange rates to commercial banks whose bids ranged from 315 naira to 360 naira per dollar, up to 15 percent weaker than the official rate of 305 naira that commercial importers typically use.
Forward exchange rates are rates at which banks agree to exchange one currency for another at a future date.
Selling the dollars at new one- and two-month forward rates may set expectations for the central bank to allow the naira to trade at a weaker level in the future, after the government had kept it at an artificially strong value according to critics.
Banks bought $216.5 million in one-month forwards, and $154.3 million in two-month forwards, said the central bank.
Financial analysts are optimistic that the new foreign exchange policy of the Central Bank of Nigeria (CBN) would further increase the confidence in the Nigerian forex market even as the value of the naira further strengthened at the parallel market.
According to analysts at Fitch and Cowry Assets Management Limited, the new policy which ensures the provision of forex for payment of school fees, travel and medical expenses would ease the foreign currency liquidity pressure faced by banks in the country.
The pressure on the naira is also being reduced as those who would have sourced dollars from the parallel market are now being accommodated at the official end of the market.
The CBN had on Tuesday offered $500 million for sale but had sold $370 million as banks ran out of naira to buy up the dollar sales.
Analysts at Cowry Assets said they “anticipate that the new measures could pave the way for a gradual return of confidence in the foreign exchange market. We also expect the monetary authority to do more to harmonise the exchange rates and thereby discourage arbitraging.”
Fitch Ratings said the most important aspect of the CBN’s announcement was a plan to normalise the forex interbank market.
“The intention is to clear the backlog of overdue foreign currency obligations owed by banks to international creditors. These are primarily trade finance obligations owed to correspondent banks.
“In addition, the CBN will no longer have a say in how banks on-lend the foreign currency they access from it.
Banks previously had to demonstrate that funds were being directed to priority sectors of the economy.
The CBN said that providing foreign currency to the manufacturing sector is still a priority, but with restrictions eased, larger banks with greater access to foreign currency will be free to lend to the smaller banks whose access to international funding is restricted,”it said.
Fitch noted that the reduction in the length of days of forward contracts from 180 days to 60 days would reduce waiting period for banks and should help banks make more timely payments to creditors, speeding up the flow of currency to importers and helping the economy.
“The CBN’s initiatives are an important boost for banks as access to foreign currency liquidity is tight and banks have struggled to meet their foreign currency obligations,” Fitch said in a release yesterday.
Nigeria is highly dependent on imports and Nigerian banks have long provided trade finance facilities to importers.
Currency scarcity and exchange rate weakness have made it harder for importers reliant on naira-denominated cash flows to service US dollar-denominated trade finance lines, forcing some banks to restructure their obligations with international correspondent banks last year.
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