L
LequteMan
Guest
The Nigerian Naira on Friday appreciated against the dollar at the parallel market, exchanging at N360 to the greenback, Naij reports.
According to traders, liquidity dropped sharply and the cost of borrowing climbed after commercial lenders moved cash to their naira accounts with the central bank to enable them to take part in the weekly forex intervention on Thursday.
On Tuesday, banks deposited about 700 billion naira ($3.5 billion) to back their planned forex purchases, draining liquidity in the banking system and pushing the lending rate above 4 percent.
"The cost of funds dropped today (Friday) based on expectation that the central bank will refund a portion of cash deposited for forex intervention before the close of business," one dealer said.
The central bank usually intervenes once a week in the official interbank foreign exchange market to provide dollars for eligible importers, while it requires commercial lenders to fund its naira account 48 hours ahead of the intervention.
According to traders, liquidity dropped sharply and the cost of borrowing climbed after commercial lenders moved cash to their naira accounts with the central bank to enable them to take part in the weekly forex intervention on Thursday.
On Tuesday, banks deposited about 700 billion naira ($3.5 billion) to back their planned forex purchases, draining liquidity in the banking system and pushing the lending rate above 4 percent.
"The cost of funds dropped today (Friday) based on expectation that the central bank will refund a portion of cash deposited for forex intervention before the close of business," one dealer said.
The central bank usually intervenes once a week in the official interbank foreign exchange market to provide dollars for eligible importers, while it requires commercial lenders to fund its naira account 48 hours ahead of the intervention.
