Naira exchanges flat after CBN raises interest rate

The naira exchanged flat with the dollar at the official foreign exchange (FX) market, the same day that the Central Bank of Nigeria (CBN) raised its benchmark interest rate to 26.25 percent, the third straight time this year.

After trading at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, the naira appreciated marginally by 0.23 percent as the dollar was quoted at N1,465.68 as against N1,468.99 quoted on Monday according to the data from the FMDQ Securities Exchange Limited.

The intraday high closed at N1,549 per dollar on Tuesday, stronger than N1,556 closed on Monday. The intraday low closed flat at N1,401/$1 compared to N1,400 quoted on Monday.

Read also: Naira gains to N1,468.99/$ as external reserves crawl

The daily foreign exchange market turnover increased by 66.14 percent to $268.17 million on Tuesday from $161.41 million recorded on Monday.

At the parallel market, also known as black market, the local currency appreciated to an average rate of N1,478 per dollar.

Speaking to journalists at the end of the Monetary Policy Committee (MPC) meeting on Tuesday in Abuja, Olayemi Cardoso, governor of the CBN said that foreign investors are now confident in Nigeria’s FX market.

“We had to prioritise the issue of backlogs to give more confidence to those looking to come in because if you have a backlog, they want you to clear that backlog before they come and invest.”

“We’ve had extensive engagement with foreign direct investors (FDIs) in that respect, both locally and internationally. And for those who have been here and understand Nigeria and have witnessed the different reforms that have been taking place in the financial ecosystem, they are very positive,” Cardoso stated.

Responding to questions on foreign portfolio investors coming in and existing, he said, “As indeed with any market, there is free entry and free exit. That is what you will expect in any market. Whether it is a foreign exchange or the stock market, this is how it works. What we have seen is that portfolio investors do come in and at a certain level, they go out again. I know of some that have come in, gone out and are coming back again. That is how we normally expect those markets to function.”