Naira appreciates further against major currencies in outgone week

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dollars-n-nigeria-naira-cashThe Nigerian currency, the Naira, remained stable in the outgone week, as it firmed against some foreign currencies following the Central Bank of Nigeria (CBN’s) liquidity tightening, the News Agency of Nigeria (NAN) reports.

Some foreign exchange traders told NAN that the noticeable Naira stability in the period under review led to the impressive and sustained rallies against major foreign currencies

According to them, the demand and supply forces had led also to price adjustments in the market and created room for sustained naira appreciation.

NAN recalls that the CBN had in September re-introduced the Retail Dutch Auction System (RDAS) to replace the Wholesale Dutch Auction System (WDAS) as a monetary policy tightening measures aimed at taming inflationary pressure.

The RDAS policy is also expected to curb round tripping by banks and reduce currency speculation.

A bureau de change operator, Mr Harrison Owoh, said that the RDAS policy has made it unattractive for speculators to hoard foreign currencies.

Owoh, the Managing Director of HJ Trust and Investment, said that most speculators were now diverting money into other businesses, which has reduced the pressure on Naira.

He added that the CBN policy through the re-introduction of RDAS had allowed traders to have direct access to foreign currencies.

Another foreign exchange trader, who pleaded anonymity, said that RDAS has reduced the unnecessary competitions among traders in sourcing for foreign currencies.

In the week under review, the CBN Governor, Malam Sanusi Lamido Sanusi, also urged the Federal Government to consider diversifying the source of funds for infrastructure development.

Sanusi said that Nigeria could diversify the sourcing of infrastructure development funds by tapping into the cheap international bond market.

He identified other cheaper options for infrastructure development funding to include Diaspora funds, and Islamic finance called Sukuk.

The Guaranty Trust Bank (GTB), as part of efforts to boost its income and leverage the nation’s economy, also in the period under review inaugurated a five year 400 million dollar Eurobond with 6.0 per cent coupon.

Analysts said that the GTB Eurobond, scheduled to mature in 2018, could be included in the JP Morgan Corporate Emerging Market Bond Index (CEMBI).

The analyst also called on both domestic and foreign investors’ to buying into the financial vision of the GTB Eurobond with an annual return of 6.25 per cent and 6.50 per cent, respectively. (NAN)

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