• Monday, April 22, 2024
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Naira sustains recovery to N1,300/$ after additional rate hike by CBN

Naira snaps one-month rally, weakens to N1,230/$ in street trading

Bureau de Change (BDC) operators in Abuja quoted the naira between N1,280 and N1,300 against the dollar Wednesday afternoon, a day after the Central Bank of Nigeria (CBN) jerked up key benchmark rates to curb inflation and sustain naira strengthening.

Some BDC operators at the popular Zone 4 market in Abuja confirmed that the naira is fast bouncing back as they further foresee it strengthen to N1,000/$ in coming months.

“The dollar is dropping and that’s why the rate I’m giving you,” one BDC operator identified as Yusuf who quoted offered to sell at N1,290/$ told BusinessDay at the zone 4 market.

“Government’s target is to bring the rate to N1,000 a dollar and that is what we are all praying for, the naira rate should come down.

“There is now money in the market. Apart from the allocation by the CBN, private people are bringing money to sell. That’s why the rate is dropping. Dollar is available now,” he added.

Amongst other measures, the CBN went bullish again on Tuesday, jerking up the Monetary Policy Rate (MPR) raised 200 basis points to 24.75 percent, indicating a 600 basis point raise within just a month.

The committee also adjusted the asymmetric corridor around the MPR to +100/-300 basis points.

But beyound the rate hike, the market is also responding to recent audacious moves by the CBN to sanitize the market and strengthen the naira, including moving against speculative demand coupled with resuming its twice a week dollar sales to the BDCs of $10,000 at each auction.

Analysts also say that the CBN’s clearing of the fx backlog has brought back transparency into the market and encouraged more fx inflows.

The CBN is also keeping a close watch at the market, especially the parallel market in a move to deal with wide spread speculation.

Yusuf confirmed that for over month, law enforcement agencies have permanently been in the market to surveil and tame speculators and avoid over quoting the naira especially beyound the N1,270/$ expected by the CBN at the moment.

“For almost one month, they have been in the market, and they use to control the price. They will not allow the rate to go up like that, all the time , they are here,” Yusuf said.

On news earlier in the day that the Naira exchanged for about N1,000/$, Yusuf dismissed it and said such was only to manipulate the market – though he was hopeful that the local currency would strengthen to that in a short while.

According to him, “News is also affecting the market.”

Another BDC operator Identified as Usman who also spoke to BusinessDay quoted N1,280 while his colleague said he would sell at N1,150.

On the wide discrepancy in rates, they said some of the rates be being quoted may not be real as many of their colleagues in the market are equally “scared since no one really knows whether the person asking for the rate is a real customer or government people.”

Briefing on the outcome of the MPC meeting on Tuesday, Cardoso had reiterated satisfaction the level of stability achieved in the foreign exchange market in the last few weeks.

“This, in the view of Members reflects the impact of the Bank’s recent policy actions and reforms, as well as increased transparency in the market. In addition, the Committee noted the efforts of the Bank in offsetting verified foreign currency obligations, an action that will greatly enhance investor confidence and attract foreign investments to Nigeria.”