The intervention of the apex bank has improved the value of the greenback in the local market.
The naira closed flat at 386 against the United States dollar on the parallel market on Monday, the same rate it closed on Friday.
This was despite a $457.3m injection into various segments of the forex market by the Central Bank of Nigeria on Monday.
The central bank has continued to supply into the foreign exchange market. It had supplied over $380m into the forex market last Monday. Before appreciating to 386/dollar on Friday, the local unit had closed at 390/dollar daily consecutively between last Tuesday and Friday.
According to financial and currency experts, the naira’s outlook remains stable in the near term as the regulator steps up efforts to improve dollar liquidity and achieve exchange rate convergence.
Critics of CBN policies have, however, said the regulator may not be able to sustain steady supply of forex into various segments of the market over a long time. The naira closed at 305.60 to the dollar on the interbank market on Monday, same level it did on Friday.
The Global Economist, Renaissance Capital, Charles Robertson, described the official rate of the naira as a “fair value”. He suggested that the value might need to be weaker to attract foreign investors into the country.
According to Robertson, exchange rate issues are making Nigeria to underperform its peers in East Africa. He, however, said the country would make significant improvement in ease of doing business and corruption data over the next one year owing to recent positive steps by the Federal Government.
A currency expert at Ecobank Nigeria, Mr. Kunle Ezun, believes the CBN’s policies are yielding result. He said the foreign exchange window tagged ‘Investors/Exporters FX Window’’ recently created by the apex bank was a good development.
Ezun, however, said it was too early to determine the amount of forex inflows going through the window.
“We expect the naira to trade within the prevailing band in the coming days, but investors are still worried over the multiplicity of exchange rates in the market,” one senior currency trader told Reuters.
The CBN has been intervening aggressively since February to try to narrow the spread between the official and black market rates and has sold more than $4bn.
But the CBN said on Monday that the lull witnessed in the forex market last week had been terminated by the injection of $457.3m into various segments of the market. In a statement, the regulator said a breakdown of the offer indicated that both spot and forwards garnered the sum of $267.3m while the wholesale segment got $100m.
The regulator said the SMEs and invisibles segments comprising of basic travel allowance, tuition fee and medical got $50m and $40m respectively.
Meanwhile, the volume of trading on the “Investors and Exporters FX Window” in the past three weeks on the FMDQ platform has reached the sum of $600m.
This includes the amount sold by both the CBN and autonomous sources. The Acting Director, Corporate Communications, CBN, Isaac Okorafor, said the level of activities in the market was encouraging.
Okorafor said the Investors and Exporters FX Window segment had recorded significant volume of activities
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