06 March 2017, Lagos – The naira is expected to reverse the losses recorded last week during the week as the Central bank of Nigeria pumps more dollars into the foreign exchange market.
According to economic and currency analysts, the local currency may become steady in the coming days after the currency has responded to the CBN’s measure to close the gap between the official and parallel market rates.
The gains recorded by the naira against the greenback following the CBN measure were lost last week.
The gap led to sharp appreciation of the naira.
The local currency is expected to make some significant gains following the release of additional $350m to the market by the CBN on Friday.
On Sunday, the naira closed at 465/dollar after appreciating to 425/dollar early last week.
The CBN had two weeks ago commenced the implementation of the reformed forex policy with a promise to sell $1m weekly to each of the 21 commercial banks in the country.
Following the announcement of the new forex policy measure by the CBN, the naira commenced a gradual reversal of its previous losses.
Foreign exchange traders said the CBN had intervened on the official market in recent days.
Last week, the central bank started systematic injections of dollars to cater for the needs of private individuals and some corporations in a move to ease pressure on the local currency.
The local unit traded at 305.25 to the dollar on Friday on the official market, same level it has traded since August.
It traded at 465 per dollar on the black market on Friday.
The naira had gained 2.2 per cent to 450 per dollar on the black market on Tuesday, a more than four-month high, a day after the CBN sold dollars on the interbank market to increase dollar liquidity and support the naira.
According to experts, the naira will record gain this week if the CBN sustains the injection of dollars into the market.
“The pressure is beginning to come back. But if the CBN continues with the intervention, the naira may gain this week. But I think the CBN will be cautious on the intervention in order not to compromise the external reserves,” the Chief Executive Officer, Cowry Assets Management Limited, Mr. Johnson Chwukwu, said.