The naira extended its declines at the official market on Monday, falling to 307.5 against the United States dollar.
The local currency closed at 307 to a dollar last week at the official market from the 305.50 level it had traded since last year. It was quoted at 445 at the black market, firmer than the 450 a dollar it closed on Friday.
The Central Bank of Nigeria on Monday said it offered a total of $180m to meet bids for forwards, which includes requests for invisibles such as medicals, school fees and personal travel allowances valued at $80m, through the interbank window.
The Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, said the wholesale requests would be settled on Tuesday (today), adding that the closing interbank rate was N307.5/$1.
Okorafor said with the fresh forex supply, naira should further strengthen in the foreign exchange market in the days to come.
He said the CBN had so far met all the legitimate demands from genuine customers, and would ensure sustainable forex liquidity and transparency in the process to enable as many customers as possible to get access to forex.
Okorafor advised eligible individuals with genuine foreign currency needs to freely approach their banks and authorised dealers with their request, stressing that the CBN had made adequate provisions of foreign currency for all such legitimate purposes.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the depreciation of the naira at the official market might be part of the CBN’s effort to narrow the gap between the official and parallel market rates and achieve a market-reflective exchange rate.
“The central bank could adopt an intentional strategy to allow the naira to depreciate at the official window of the market, even as the parallel market is appreciating, to reduce the spread between the two markets and achieve a more market-reflective exchange rate,” he said.
A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said a true price discovery may not happen as quickly as one would have expected.
“The idea is that once they are able to fight the parallel market, they will want to allow the official market to depreciate and again reflect the market position.”
He said the 305 at which the naira was trading before now was a managed rate.
Ezun said, “It is only when you have that interplay between demand and supply that you begin to see a rate that reflect the market. So, that may begin to happen but it may not be as fast as one would have expected.
“But gradually, with confidence coming back to the market and the appreciation that we have started seeing in the parallel market, then we will begin to see a level of competitiveness in the official market.”