CBN struggles parallel market to halt Naira slide
from OKORO CHINEDU in Lagos, Nigeria
LAGOS, (CAJ News) – MARKET watchers are skeptical of recent moves by the
Central Bank of Nigeria (CBN) to halt the currency weakening against the United States Dollar.
The central bank has moved the rate slightly to 196,95 against the greenback from 197, reflecting the level of dollar supply in the interbank market.
There were two substantial dollar sales by the central bank on Thursday, totalling US$36,4 million at the rate of 196,95.
Meanwhile, the unit traded between 215 and 218 in the parallel market.
“Although a slight change to the peg, it is probably not the best move as Nigeria’s reserve position remains precarious,” said any analyst.
Rand Merchant Bank (RMB) Global Markets, the economic think-tank pointed out that the CBN continued to ration foreign exchange based on its assessment of legitimate demand, but the chronic drawdown in gross reserves, which were reported at US$29,4 billion on Tuesday, brought into question the bank’s ability to match interbank orders indefinitely.
“While we remain partial to a flexible and price-driven market, the CBN is likely to remain the key provider of liquidity to the economy. Governor (Godwin) Emefiele highlighted that the Bank will continue to review its current approach to FX stability, and will amend its process when needed,” RMB stated on Friday.
– CAJ News
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