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Naira Ends The Week With 0.97% Loss Against Dollar

The foreign exchange market ended the five trading days with the naira losing 0.97 percent against the dollar due to demand pressure on the parallel market, popularly known as the black market.

After trading on Friday, the naira/dollar exchange rate closed at N520/$ as against N515/$ closed on the previous day at the same market.

Naira had steadied at N515/$ in the last one week before depreciating to N517/$ on Thursday following increased demand for the greenback by the end-users.

The local currency fell sharply to N525 to the dollar on July 28 after the Central Bank of Nigeria (CBN) announced that it would discontinue the sale of dollars to the Bureau De Change (BDC) operators due to foreign exchange infractions.

At the Investors and Exporters (I&E) forex window, Naira ended the week unchanged at zn411.67 per dollar.

However, Naira appreciated by 0.04 percent as the dollar was quoted at N411.50 on Tuesday as against the last close of N411.67 on Monday at the official market.

On Wednesday, naira weakened by 0.06 percent as the dollar was quoted at N411.75k/$ as against N411.50k/$ closed on the previous day, data from the FMDQ indicated.

Naira appreciated by 0.02 percent as the dollar was quoted at N411.67 on Thursday as against the last close of N411.75/$ on Wednesday.

The Naira/dollar exchange rate closed flat at N380.69/USD at the Interbank Foreign Exchange market amid weekly injections of USD210 million by the Central Bank of Nigeria (CBN) into the forex market, according to a report by Cowry Asset Management Limited.

A breakdown of the disbursement showed USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.

Elsewhere, the Naira/USD exchange rate depreciated for most of the foreign exchange forward contracts: Spot rate, 1 month and 6 months closed flat at N379/USD, N412.23/USD and N421.66/USD respectively.

However, 2 months and 3 months exchange rates rose by 0.07 percent and 0.06 percent to close at N413.77/USD and N415.50/USD respectively while 1-year contract appreciated by 0.12 percent to N434.37/USD.

“We expect the I&E FX rate to trade around current levels depending, to some degree, on the level of the external reserves. However, we may see a sustained exchange rate gap between the official channels and the parallel market amid growing demand for foreign exchange. In the medium term, however, we expect to see a moderation in exchange rates amid anticipated foreign currency inflows from Eurobond issuance of USD6.2 billion and the anticipated USD3.4 billion SDRs (Special Drawing Rights) from the International Monetary Fund (IMF),” analysts at Cowry Asset said.

Within the week the CBN issued a warning to the public against Naira abuse. Consequently, the Apex bank said it is collaborating with the Nigeria Police, Federal Inland Revenue Service (FIRS), the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) to prosecute Naira abusers.

This was disclosed in a statement signed by Osita Nwanisobi, acting director, corporate communications, on Tuesday.

The CBN said this is a response to the activities of persons, who flagrantly abuse the legal tender by hurling wads of Naira notes in the air and stamping on the currency at social functions.

According to the CBN, there have also been cases where people mishandle the Naira, deface it, hawk the currency at parties and reject the currency in some instances.

The regulator said contrary to the practice of these unpatriotic persons, it is neither cultural nor moral, for people to disrespect the currency which citizens trade-in.

“For the avoidance of doubt, Section 21(3) of the Central Bank of Nigeria Act 2007 (As amended) stipulates that “spraying of, dancing or matching on the Naira or any note issued by the Bank during social occasions or otherwise howsoever shall constitute an abuse and defacing of the Naira or such note and shall be punishable under the law by fines or imprisonment or both.”

The CBN, therefore, warned Nigerians, particularly those at social functions such as birthdays, weddings and funerals, to desist from disrespecting the Naira or risk being arrested by law enforcement agencies.

“The Naira is our legal tender and symbol of national pride. Let us respect it and handle it with care,” the statement reads