The naira maintained stability against the American dollar at the parallel segment of the foreign exchange market, this week. Nigeria’s currency sold at N450 to $1 on Friday and has remained at this rate for the past six working days, refusing to breach the N450 support levels.
The stability of the naira is reinforced by the country’s foreign reserves, which have remained relatively stable at around $36.5 billion as at Thursday.
Nigeria’s central bank, some weeks ago, resumed dollar sales to individuals and businesses with genuine needs, selling around $100 million per week, though it is yet to resume selling to foreign-based investors; it had scrapped a planned auction due to lockdown measures to slow the COVID-19 pandemic.
The Central Bank of Nigeria (CBN) stated recently that it would use all the monetary tools it had to rescue the Nigerian economy from the fallouts of the COVID-19 induced global economic strain, and stabilize the naira. It had also taken some concrete steps to tackle currency speculators.
Meanwhile, the dollar was up on Friday, with the U.S. reporting more than 2 million COVID-19 cases as of June 12, triggering renewed fears of a second wave of cases.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.10% to 96.85 by 4:54 am, Nigerian time.
“The animal spirits aren’t so strong,” Marc Chandler, Chief Market Strategist at Bannockburn Global Forex said to CNBC. “One trade is rippling through the markets: taking profits on equities, beating up on emerging markets, unwinding gains in these leading currencies and flocking to the safety of the debt markets.”
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