Monday, April 16, 2018 /08:45 AM/ FBNQuest
CBN’s unorthodox foreign exchange policies have exceeded almost all
expectations, including we are convinced its own, and can be said in several
ways to have attained its objectives. Fx has become available for all users provided
that they can live with the price in the appropriate window.
has been achieved: the differential of about N60 per US dollar between the
interbank/official and the bureaux de change (BdC) rates has barely moved since
June 2017. Turnover at the investors’ and exporters’ window (NAFEX) has settled
well above US$1bn per week.
turnover data, of course, represent both sides of trades. There is no detail
available on the participants although it is widely said that the CBN has
become an active player on the bid. One reliable source has suggested that its
cumulative purchases amount to at least US$6bn.
has prevented appreciation of the naira exchange rate, and conflicts with the
view attributed to the CBN hierarchy that the currency is undervalued in the
context of the international oil price and Nigeria’s reasonably strong external
The success of
the experiment could be developed into an argument for the unification of rates
(at or near the NAFEX level) on the grounds that “the hard work has been done”.
The NNPC has to surrender its export proceeds at the interbank/official rate, and
would benefit from such.
imperfections, we do not see any change before the elections.
While we have a firm crude oil price, we
have very modest domestic pressure for unification. This would rapidly change
if the price crashed again, which is not our expectation. For now, as urged in
the latest communique of the monetary policy committee, the CBN is accumulating
reserves for the proverbial rainy day with haste.
- Has the Naira-settled OTC FX Futures helped in
Stabilizing the Naira Exchange Rate?
- Towards the US$50bn Threshold, and Counting
- Forex: CBN Intervenes with $210m
- Nigeria’s External Reserves – Beyond The USD46bn
- CBN Buoys Forex Market with $210m
- Nigeria’s External Reserves Climb to $46bn
- CBN Injects $335.43m into Retail SMIS
- Gross Official Reserves Increased by US1.81bn in
- CBN Boosts Forex Market With $210m
- Forex: Inter-Bank Market Gets $210 Boost