CBN working hard to make FX rates converge, spokesman says

Date:

LAGOS May 2 – Nigeria’s central bank is working to make exchange rates for its currency converge on the official and black markets, its spokesman said, and plans to offer $100 million on the forward market on Tuesday to boost liquidity.

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Nigeria runs a system of multiple exchange rates, and the central bank has sold more than $4 billion on the spot and forward markets in its efforts to increase liquidity. In theory, greater liquidity should lead the rates to converge.

The naira was quoted weaker on Tuesday at an investor trading window, at 380.31 per dollar, data from market regulator FMDQ OTC Securities Exchange showed. The official market rate was 305.85 and the black-market rate 390.

On the spot interbank market, the naira traded a total of $51.68 million, volumes last seen in October 2016.

“The bank is committed and is indeed working to achieve convergence in the forex rates between the interbank and the bureau de change segment,” said spokesman Isaac Okorafor.

The central bank said all dollar allotments must be backed by demand and that it will settle Tuesday’s dollar sale between one week and 45 days after the sale.

It then said it would intervene with an undisclosed amount to clear a backlog of demand for airlines, raw materials and machinery and that it would debit the companies for the naira equivalent of the dollar amount immediately.

The bank offered $100 million last Thursday but ended up selling $85.69 million. Okorafor said in a statement lenders did not take up the whole offer as there was “enough foreign exchange to meet legitimate demand”.

Analysts doubt whether the central bank can sustain such sales. The convoluted exchange rate system masks pressure on the naira with the regulator trying to avoid a devaluation.

Okorafor said the bank has the capacity to sustain its intervention.

Nigeria’s dollar reserves grew to a 19-month high of $30.8 billion last week, thanks to a recent rise in global oil prices, the country’s main source of hard currency. But reserves remain far off the peak of $64 billion reached in August 2008.

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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