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HomeBankingNaira May Stabilize Next Week, Analysts Predict

Naira May Stabilize Next Week, Analysts Predict

Increased dollar liquidity from monthend dollar sales by International Oil Companies (IOC) could stabilise the naira next week, financial analysts have predicted.

According to a note by analysts at Citibank which says, “As we approach month-end, we expect the multinational oil companies to begin their month-end dollar sales to generate some naira. This should provide supply of dollars to the market in the coming days.”

The naira was quoted within the range of N281- N284 to the dollar at the interbank market yesterday, a range it has been trading at since the new forex policy introduced by the Central Bank of Nigeria (CBN) commenced last Monday.

Analysts attribute the local currency’s stability so far to dollar sales by the apex bank. According to Reuters, the naira traded at N283 to the dollar yesterday on volumes of $76.8 million.

It will be recalled that the foreign-exchange trading platform, FMDQ OTC Securities Exchange, said in a statement on its website that the regulator sold $532 million on the spot market and $3.49 billion on the forward market on the first day of trading under the new system.

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Similarly, last Tuesday, the banking watchdog was said to have sold a total of $31 million at between N282 and N285. Expressing support for the new forex policy, Moody’s said that although the CBN, “is likely to continue to intervene,” the new system would “gradually eliminate any gap between unofficial exchange rates” and help boost the country’s income.

Significantly, the take off of the new forex policy has led to the naira appreciating on the parallel market. As at yesterday, the local currency strengthened to N335 to the dollar against 370 a dollar last week.

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