*Photo used for illustrative purpose*
Fresh latest news as the naira has continued to gain against the United states dollar as
it closed at N445/$1 at the parallel market on Monday following
injection of dollars to the market by the Central Bank of Nigeria.
It is reported that the CBN has sold additional $180m into the market this week, barely
one week after selling about $600m. The steady supply of forex is in
line with the modification made to the forex policy by the
regulator. The CBN last Monday commenced the implementation of the
reformed forex policy with a promise to sell $1m weekly to each of the
21 commercial banks in
the country.
the country.
The local currency, which had tumbled to 520/dollar last Monday, closed at 450 on Friday.
Forex traders told our correspondent on Monday that the naira
closed flat because there was no release of fresh funds into the market.
Following last week’s announcement of the new forex policy measure
by the CBN, the naira commenced a gradual reversal of its previous
losses, closing at 512/dollar last Tuesday.
It recorded further gain last Wednesday and Thursday, closing at 505/dollar and 495/dollar, respectively.
Foreign exchange traders said the CBN had intervened in the official market in recent days.
Economic and financial experts on Sunday said that the naira would record further gain this week but not as big as last week’s.
“There is always a restriction point beyond which the exchange
cannot cross except there is a huge forex inflow to breach that
ceiling,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.
The Managing Director, Financial Derivatives Company Limited, Mr.
Bismarck Rewane, commended the CBN for the policy reform and wondered
why the regulator had delayed such measure for months.
Rewane said, “With less than $600m supply into the spot market,
the naira had gained 13 per cent of its value to N460/$ as of Friday.
Can you imagine what would have happened if the spot market was
adequately funded in a transparent manner for nine months ago, rather
than the opaque forward transactions
“Maybe we could have had a soft landing rather than a race to
the bottom. This move by the CBN is a good one in the right direction
provided the dollar supply is sustained.
“We expect the CBN to commit itself to a regular and
predictable supply of dollars to the forex spot market in March. There
will be a rapid convergence of rates and a gradual end to multiple
exchange rates and forex abuse.”
The Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu, also said the naira would rise further this week.
Chukwu said, “Confidence is beginning to return to the market.
The naira will gain further but there may be resistance around
N400/dollar because the CBN sells to the BDCs currently at 381/dollar.
“The CBN needs to watch and sustain this intervention for
weeks. They need to work with the fiscal authority to get the $2.3bn
loan from World Bank and China released on time.”
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