The Nigerian economy is showing signs of positivity as the naira continues to gain against the dollar in the black market.
The naira posted a marginal gain against the United States dollar at the parallel market on Monday, closing at 364/dollar.
The local currency closed at 365/dollar on Sunday. The development brought the rate closer to the official price of 360/dollar for invisible transactioms.
Following the continued supply of the dollar to the foreign exchange market, the CBN local currency has recorded major appreciation from its all-time-low of 520/dollar.
Deposit Money Banks currently sell dollars to end-users in the invisible transactions segment at 360/dollar. Invisible transactions include tuition fees, medical bills and personal travel allowance, among others.
The local currency had closed at 371/dollar the previous Friday, having appreciated to 374/dollar the previous Thursday from 382/dollar recorded on Wednesday.
Two weeks ago, the local unit had closed at 382/dollar. Currency analysts have said they expect the naira to be stable across the board in the near term on increased dollar supply to both the official interbank window and the black market.
At the interbank market, the naira was trading at around 305.40 per dollar. According to Reuters, the Central Bank of Nigeria has been intervening on the official market to try to narrow the spread between the official interbank and black markets.
The CBN has sold over $4bn since February, improving dollar supply and providing support for the naira. The recent gains recorded by the local unit have brought the CBN closer to its plan to achieve rate convergence.
However, economic experts have said that whichever way the regulator wants to achieve this convergence (either around the lower band of N305/dollar, mid-point band of N320/dollar or around the upper band of around N360/dollar), the country has a huge price to pay.
Meanwhile, the CBN on Monday intervened in the inter-bank foreign exchange market to the tune of $413.5m.
The regulator said the action was part of its resolve to guarantee liquidity in the market and shore up the international value of the naira.
Giving a breakdown of the intervention, the CBN Acting Director, Corporate Communications, Mr. Isaac Okorafor, said the bank offered the sum of $100m to dealers in the wholesale window, while the Small and Medium Enterprises window was allocated a total of $28m.
The invisibles segment was allocated the sum of $25.5m to meet the needs of those requiring forex for Business/Personal Travel Allowances, school tuition, medicals, etc.
The bank also released the figures for the auction sales in the retail window last week, totaling $260m. The CBN spokesperson said the Bank was optimistic that the naira would continue its strong run against the dollar and other major currencies around the world, considering that transparency in the market had ensured greater stability.
On the bank’s objective to achieve convergence between the forex rates at both the inter-bank and the Bureaux De Change segments, Okorafor said the CBN was confident of achieving the goal soon, particularly if all stakeholders played by the rules.
He therefore charged all dealers, principally licensed BDCs, to abide by the rule, for the sake of the economy.