CBN Auctions Maiden Chinese Yuan

Naira, Yuan
Naira, Yuan

Central Bank of Nigeria, Wednesday, auctioned its maiden Chinese Yuan worth N3.6 billion at Naira 49-51 per Yuan.

The auction is part of efforts to encourage the use of an alternative trading currency to the US dollar, as Nigeria is one of the largest importers of Chinese goods in Africa.

Chief Economist with Vetiva Capital Management says the move will strengthen naira and eliminate multiple exchange rate.

The development, which came few days after the official take-off of foreign exchange intervention with the foreign denomination, was executed alongside the usual interbank retail Secondary Market Intervention Sales worth $340.5 million.

The figures obtained from the Nigerian apex bank showed that the US denominated interventions were only for demands in the agriculture and raw materials sectors.

While some traders expressed optimism on the effectiveness of the auction in the long term, it was learnt that some banks received about 60 per cent of what they asked for through the “quote” system.

A gauge of the sentiments of some market operators on the exercise showed that the exchange rate was adjudged cheaper, considering what it would have cost them if executed in dollar.

Isaac Okorafor, the Acting Director, Corporate Communications at the CBN, said the sales in the Chinese currency were through a combination of spot and a 15-day tenor.

Okorafor explained that the exercise was, in line with its guidelines, for the payment of Renminbi denominated letters of credit for agriculture as well as raw materials and machinery.

He further expatiated that the requests attended to were bids received from authorised dealers, adding that the availability of Renminbi was to ease pressure on the foreign exchange market.

He attributed the relative stability in the forex market to the continued intervention of the CBN as well as the sustained increase in crude oil prices at the international market.

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Okorafor assured that the bank was committed to ensuring that all the sectors continue to enjoy access to the foreign exchange required for their business concerns, be it the US dollar or Chinese yuan.

Meanwhile, the price of the Naira against three major currencies in the world was still low in a row of two days.

Between July 31 and August 1, 2018, Naira was bought N357 a dollar in the parallel market and sold at N360.

For Euro, Naira was bought 414 and sold 417.

For Pounds, it was bought 473 and sold 480.

Though Naira to Dollar exchange rate was pegged at an official rate of N305.5 per $1, it had been at what could be described as freefall in the black market.