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Naira Gains 0.28% at Black Market, Loses 0.09% at I&E Segment

By Dipo Olowookere

This week, the local currency strengthened against the Dollar at the parallel (black) market by 0.28 percent to N362/$ while the Naira/Dollar rate remained unchanged at the interbank foreign exchange market and the Bureau De Change segments at N330/$ and N360/$ respectively.

However, Naira weakened at the I&E forex window by 0.09 percent to close at N360.75/$ from N360.41/$ despite weekly injections by Central Bank of Nigeria (CBN) of $210 million into the foreign exchange market.

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According to analysts at Cowry Asset, the apex bank allocated $100 million to the Wholesale (SMIS) window, gave $55 million to the Small and Medium Scale Enterprises, while $55 million was also sold to cater for invisibles.

During the week too, Nigeria and China sealed an annual $2.5 billion (or RMB16 billion) currency swap deal to facilitate trade between the two countries.

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This would be done by providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby sidestepping a third currency, the US dollar.

This arrangement is expected to ease pressure on the limited Dollar supply at the Investors & Exporters Forex Window (I&E FXW) and hence, enhance stability of the NGN/USD exchange rate.

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Meanwhile, most dated forward contracts at the interbank over-the-counter (OTC) segment appreciated amid rising external reserves – 2 months, 3 months, 6 months and 12 months contracts strengthened by 0.06 percent, 0.16 percent, 0.69 percent and 0.85 percent to close N366.70/$, N370.10/$, N381.10/$ and N401.90/$ respectively.

Next week, Cowry Asset expects stability in exchange rate as CBN continues with the weekly intervention.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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