Naira Steady Despite #EndSARS Protests
The naira last week traded at the parallel market for N463 against the dollar, a slightly weaker ratio from the N462 exchange rate the previous week.
Naira’s exchange rate remains at N379 to the dollar at the official market.
The local currency however sustained its stability despite the impact of the #EndSARS protests across major cities in the country and reduced business activities triggered by the protests.
The deadly clashes between protestors and security forces escalated and led to number of deaths.
Analysts said that negative sentiment against the naira slowed as rioting, blazes and round-the-clock curfews slowed economic activity and shuttered many businesses.
Investors in the equities market also earned N19.7 billion profit as market capitalisation rose to N15 trillion, putting the year-to-date returns at 6.9 per cent.
Speaking on the development, Murega Mungai Trading Desk Manager, AZA, global currency dealing leader, said naira remains in a risk-averse state, with Amnesty International (AI) saying at least 56 people have been killed since the #EndSARS protests began earlier this month.
The Central Bank of Nigeria (CBN) projected that lower oil export revenue and the economic impact from the pandemic would cause external reserves to sink to between $29.9 billion and $34.3 billion by year-end, with the development expected to further add to naira’s pressure.
Even though speculative buying has been lower than normal, anticipation of naira depreciation has driven hoarding of dollars, while demand for forex from manufacturers persists.
While the CBN has tried measures within its mandate to ensure it meets forex demand, it is likely to see continued pressure on the local currency in coming months.
The stability of the naira has also been boosted by CBN’s continued injection of dollar to the Bureaux de Change (BDCs) sector, where a large part of the retail foreign exchange demands are met.
Over $500 million has in recent months been injected into the BDC segment of the foreign exchange market to keep the naira stable.
The dollar injections, which came after the apex bank resumed dollar sales to the BDCs, was to curb exchange rate volatility and protect the naira against attacks from forex speculators and black market traders.
CBN Director, Trade and Exchange Department, O.S Nnaji, said the gradual sale of forex to licensed BDCs was part of efforts to enhance accessibility of foreign exchange particularly to travelers.