NAIRA currency firmed against the dollar on the parallel market on Monday on weak demand amid improved dollar liquidity from a central bank sustained hard currency sales in the market, traders said.
The naira traded at 217 to the dollar at the parallel market, better than the 221 it closed last Friday as the market felt the impact of dollar sales by the central bank to bureau de change operators in the last two weeks.
“The market has started feeling the effect of the dollar sales by the central bank in the last two weeks and tight measures introduced to prevent cross boarder currency trafficking,” Aminu Gwadabe, president of Nigeria’s bureaux de change association, explained.
The central bank increased the frequency of dollar sales to the bureau de change operators two weeks ago to twice-weekly from the usual once in a week previously in a move to increase liquidity in the market and support the local currency.
Traders said many people are no longer willing to hold dollar because of the measure taking by the central bank banning dollar cash deposit in domiciliary accounts by bank customers.
“We expect to see more rally in the market if the central bank could sustain its support for the naira,” Harrison Owoh, a bureau de change operator said.
The local currency closed at 197 to the dollar on the official interbank market, same level since February when the central bank introduced tight control in the market.
In a bid to support the local currency, the central bank banned the deposit of dollar cash into domiciliary accounts of bank customers, directed banks to pay for their forex purcahses 48 hours in advance and exempted some imported items from list of those eligible to access forex at the official window.