Naira is expected to trade within a range of N345-N350 subsequently, as currency dealers wait endlessly for the implementation of the new flexible exchange rate by the Central Bank of Nigeria (CBN).
Naira yesterday traded stable at the parallel market, closing at N350 against the dollar. At the autonomous market, the local currency weakened slightly against the dollar by N1 or 0.29 percent. It closed at N348/$ as against N347/$ the previous day.
The naira had weakened shortly after the central bank announced plans for new exchange rate policy, but strengthened when the details of the new policy were delayed.
On the official interbank window, the naira was trading around the peg rate of 197 to the dollar. “The central bank was still consulting with bank industry players to determine how the new forex policy would work,” one senior banker told Reuters.
Godwin Emefiele, governor of CBN, at the last Monetary Policy Committee (MPC) meeting, noted that the average naira exchange rate remained stable at the inter-bank segment of the foreign exchange market in April 2016. The exchange rate at the interbank market opened at N197/$ and closed at N197/$, with a daily average of N197/$ between March 25 and May 13, 2016.
The MPC noted the level of activity in the autonomous foreign exchange market especially, following the deregulation of the downstream petroleum sector with attendant increased demand in the interbank market, thus further exerting pressure on the naira.
After the MPC meeting the monetary policy rate (MPR) was retained at 12.0 percent with the asymmetric corridor around the MPR also maintained at +2.0 percent/-5.0 percent. Also the cash reserve ratio (CRR) was unchanged at 22.5 percent. The liquidity ratio of the banking sector was also left unchanged at 30.0 percent and flexible exchange rate was introduced.
