CBN adjusts naira-dollar exchange rate again

CBN adjusts naira-dollar exchange rate again




The Central Bank of Nigeria on Thursday made a slight adjustment to the naira-dollar exchange rate peg again, data on its website showed.

This came exactly a week after the central bank tweaked the rate at which it sold the United States dollar from N197 to N196.95.

Prior to the two adjustments, the exchange rate had been oscillating between N197 and N199 for a few months.

Foreign exchange dealers said the central bank had sold dollars to the interbank market at the new rate the previous day.

Financial analysts and forex dealers dismissed the move as a currency appreciation, insisting that it was not market driven.

They, however, said the CBN’s action might signal the coming of a new policy that focuses on loose currency regime.

The naira opened trade on thin volumes at 198.90 to the dollar on the interbank market, Reuters reported. It traded at N220 on the black market on Thursday.

“This is not a real appreciation …. the central bank is probably trying to guide the market. It is most likely an indication to a new policy change in the FX market,” one commercial bank treasurer told Reuters.

Another dealer said the central bank might be trying to guage the level at which it can defend the naira, but noted that the bank was running low on ammunitions to do this.

The Head, Investment and Research, Afrinvest West Africa Limited, an investment research and advisory firm, Mr. Ayodeji Ebo, had said the CBN’s action might be linked to the relatively reduced pressure on the external reserves.

“It is a rate adjustment but it is too small to be called a revaluation. The adjustment is too small to cause any pressure on the naira. The CBN feels the action will not affect its defence of the naira,” he said.

On Sunday, JPMorgan said it might eject Nigeria from its Government Bond Index for Emerging Markets by the year-end unless the country restored liquidity to its currency markets in a way that allowed foreign investors tracking the benchmark to transact with minimal hurdles.

The nation’s external reserves fell to $29.18bn as of June 9, down 1.65 per cent from last month, as the central bank burned cash to defend the local currency.

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Source: APC VS PDP NIGERIA NEWS

CBN adjusts naira-dollar exchange rate again