Posted by By Babajide komolafe on
THE Naira appreciated further in all the segment of the foreign exchange market, even as the Central Bank of Nigeria (CBN) sold $267.7 million through the Wholesale Dutch Auction last week.
THE Naira appreciated further in all the segment of the foreign exchange market, even as the Central Bank of Nigeria (CBN) sold $267.7 million through the Wholesale Dutch Auction last week.
The apex bank disclosed this in its weekly bulletin for the foreign exchange market for the week ended September 8th. The CBN stated that, 'The average marginal exchange rate of naira remained at N127.02 per dollar as in the previous week. The weighted average exchange rate appreciated marginally by 0.01 per cent to N127.03 per dollar. At the bureau-de-change (BDC) segment of the market, the average exchange rate of the naira appreciated by 0.2 per cent to close at N129.70 per dollar. Consequently, the premium between the official and bureau-de-change rate narrowed from 2.3 per cent in the week ended September 1, 2006 to 2.1 per cent during the week under review.
'Foreign exchange offered for sale under the Wholesale Dutch Auction System (WDAS) remained at US$160.00 million as in the previous week. Aggregate demand for foreign exchange by authorized dealers increased from US$288.30 million in the previous week to US$336.70 million during the week under review. The increase in demand was attributed to the lull in activities in the inter-bank foreign exchange market coupled with the liquidity surfeit in the economy. Consequently, the actual amount of foreign exchange sold by the Central Bank decreased by 2.7 per cent to US$267.70 million during the week ended September 8, 2006.
'The average number of participating banks decreased from 17 in the week ended September 1, 2006 to 16 during the week under review, while the average number of successful banks remained at 16, the same as in the previous week." It would be recalled that, in an attempt to address the wide premium between the official exchange rate and parallel market exchange rate, the Central Bank of Nigeria, CBN, in March, announced measures to further liberalise the foreign exchange market, which among other things, allows Bureaux-de-Change (BDCs) to participate in the inter-bank foreign exchange market. The measures, which are meant to address the rapid depreciation of the Naira in the parallel market, in recent times, as well as reduce the premium between the official exchange rate and the parallel market exchange rate, also allow banks and other foreign exchange authorised dealers to import foreign exchange into the country. The CBN also increased the limit on foreign exchange for Business Travel Allowance (BTA) and Personal Travel Allowance (PTA) by 100 per cent.