The naira suffered a fresh slide both at the official and parallel foreign exchange markets on Friday.
The national currency depreciated to on Friday N1,670/$ from N1,600/$ recorded at the close of trading activity on Thursday at the parallel market, while it closed at an official rate of N1,537/$ on Friday from N1,498/$ recorded the previous day.
The fresh rates also created N133 gap between the official and parallel market, signalling fresh concerns about round-tripping.
This development is despite increased dollar supply worth a total transaction volume of $3.83bn in eleven days of trading activities through the Nigerian Autonomous Foreign Exchange by Deposit Money Banks.
Data obtained from FMDQ Securities Exchange, a platform that publishes official foreign exchange trading in the country, between February 2 and February 15, showed that the increase in forex transactions.
Commercial banks, Central Bank of Nigeria and international oil firms are the major sellers on forex at NAFEM.
The improved liquidity at NAFEM followed a directive by the Central Bank of Nigeria which had asked banks to sell their excess dollar stock and improve liquidity in the FX market.
The FMDQ report indicated that the banks led others to sell $1.97bn in the first week of the CBN circular which had mandated banks not to exceed a new threshold in their FX prudential guidelines.
Penultimate week, a breakdown of the daily activities from Monday to Friday compiled by our correspondent showed that on Monday, the official FX market recorded a turnover of $584.53m; Tuesday, it reduced to $465.29m; on Wednesday it was $209.93m; Thursday it was $321.23m and on Friday, it was $253.77m.
Further analysis for the week ending showed that the supply started on a low at $116.11m on Monday; it increased by $292.3m to $381.92m on Tuesday but dropped to $117.87m on Wednesday. On Thursday, the supply increased to $336.11m.
Recall that in clusters of guidelines, the CBN ordered Deposit Money Banks to sell their excess dollar stock over the growing trend of banks holding large foreign currency positions. It also warned lenders against hoarding excess foreign currencies for profit.
On Thursday, the apex bank released another set of guidelines that stopped banks from paying Personal Travel Allowance to their customers.
In a second circular signed by its Director, Trade and Exchange Department, Hassan Mahmud, it also asked International Oil Companies not to repatriate all their revenue to their parent companies at once. The apex banks also, in the third circular, reviewed its guidelines to stop under-invoicing of exports and over-invoicing of imports.
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, who also confirmed the significant rise in FX transactions during an interactive session organised by the Senate Committees on Finance, Appropriations, Banking Insurance and Other Financial Institutions, saying recent reforms initiated by the central bank were yielding positive results in the FX market as evidenced by the liquidity boost.
SOURCE: PUNCHNG
