30 August 2016, Lagos – The nation’s foreign exchange market recorded $327m worth of transactions on Monday, about six times more than its usual volume, the FMDQ OTC Securities Exchange, told Reuters.
This included a single transaction of $270m at N345/dollar by foreign investors buying local currency bonds, the Managing Director, FMDQ OTC Securities Exchange, Mr. Bola Onadele, said in an interview.
Other transactions were carried out from N314.50 to N317.34 per dollar.
Average trading has been around $50m a day on normal days. It might reach $100m on days the Central Bank of Nigeria intervenes in the forex market.
Forex traders said the CBN sold an undisclosed amount of dollars, close to the end of market session, to help prop up the naira.
The naira closed at 305.50 on Monday, up from the 314.95 it closed at on Friday.
Monday’s surge in trading came after the CBN said on Friday that it would offer N212.85bn ($675m) in Treasury bills maturing between 91 days and one year on Wednesday.
The debt will be sold on Wednesday.
The CBN has been selling short-dated open market bills at yields as high as 18 per cent in an effort to attract offshore funds, most of whom fled Nigeria’s bond and equity markets during a financial crisis that began when oil prices plunged.
The crisis ultimately led the CBN to let the naira’s value float in June. From its controlled rate of N197 to the dollar, the local currency plunged to as much as 309 to the dollar on the interbank market and 414 to the dollar on the black market.
The continued ban of eight lenders from the forex market by the CBN has further weakened the naira against the greenback in the past one week.
Nine commercial banks were last Tuesday banned from the forex market for failing to remit the Nigerian National Petroleum Corporation’s $2.334bn into the Treasury Single Account.
The local currency was sold for 414/dollar across some black market segments in Lagos and Abuja on Sunday.
The naira had hit 412 against the greenback at the parallel market on Friday, after closing at 409/dollar on Thursday.
On Wednesday, a day after the CBN banned nine banks from the forex market, the local currency depreciated to 402/dollar, down from the 397 it closed at against the greenback on Tuesday.
At the interbank market, the naira closed at 314.95 on Friday.
Traders said interbank rates would ease this week when part of July’s budget allocation enters the banking system.
The chief executive officers of banks had met with the CBN over the forex ban issue on Thursday. They resolved to work with the CBN to resolve the forex crisis facing the country.
The naira is expected to plunge further against the US dollar this week as the dollar shortage intensifies.
Forex traders said even though the CBN had continued to sell dollars daily on the interbank market, its efforts were considered weak and inadequate, Reuters reported.