By Our Reporter
There has been some level stability in the foreign exchange market as the nation’s currency, the naira trades between N199 and N200 after the closure of the Retail Dutch Auction System (RDAS) window by the Central Bank of Nigeria (CBN).
In an effort to bring sanity into the foreign exchange market as well as save the depleting foreign reserve, closed the official forex window and channeled all FX demand to inter-bank foreign exchange market.
Consequently, naira has been trading around N199 and N200 showing some level of stability, analysts admit.
Ayodejo Ebo, Head of Investment Research at Afrinvest, told BusinessDay by phone last night that in terms of pricing, there is some level of stability as the naira trades between N199 and N200. He said in the interim, the policy of the CBN is having positive impact on the foreign exchange.
Ebo admitted that the Apex bank’s devaluation of the naira reflects the fair value of the local currency.
Although Interbank FX market liquidity remained low relative to demand, Naira volatility in the trading session following the policy review was moderated as the CBN intervened in the interbank market with Dollar auctions. The local unit closed at N199.23/US$1.00 on Friday last week relative to previous week’s close of N201.43/US$1.00, a 1.1% W-o-W appreciation, Afrinvest said in a report.
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However, the naira on Tuesday, depreciated by N0.22k or 0.1 percent against the US dollar at the inter-bank foreign exchange market.
After trading on Tuesday, the local currency closed at N200.82k/$ as against N200.60k/$ the previous day according to data obtained from Financial Markets Dealers Quotations (FMDQ).
On Monday, the naira depreciated 0.2 percent against the USD in the Inter-bank, -8.7 percent YTD. Strong USD demand, driven partly by importations and capital flight ahead of
delayed general elections continued to weigh on naira performance, Ecobank reports noted.
At the parallel market and Bureau De Change segment, the local currency remained stable as it closed at N220/$ and N218/$ respectively.
The naira is already the worst performer among 24 African currencies over the past three months and is trading near a record-low. The continent’s largest economy has been hit by the halving in Brent crude prices since the middle of last year and attacks in the north of the country by Boko Haram militants. The postponement of presidential elections scheduled for this month further dented investor confidence, Bloomberg reports.