Naira Falls To N367/$1 As MPC Meeting Resumes Today

The naira falls yesterday to N367 against the Dollar on the parallel market from N376 it opened for trading as the Central Bank of Nigeria (CBN) Monetary Policy Meeting commences today (Tuesday).

The sell side of the naira exchange rate against the pound also dropped by N3.00, to close at N475 to the pound on the parallel market yesterday, as against the N472 it opened for trading. However, the naira remained flat at N420 against the euro.

For the Investors/Exporters Foreign Exchange (IEFX) window, the naira against the Dollar opened at N365.96 and closed at N366.37 while at the Inter-bank rate, it remained at N305.8. Uncertainty continued to surround the outcome of the CBN’s Monetary Policy Meeting that commenced on Monday as speculators trade the foreign exchange market with caution.

The naira appreciated last week attributable to CBN’s injection of  $195 million — comprising $100 million (via the wholesale window), $50 million, and $45 million (via the SMEs and Invisibles windows respectively) – into the foreign exchange market.

The naira – in the interbank market last week – appreciated by 0.03 per cent and 0.49per cent against the dollar and pound to N305.80 and N409.36, respectively, but depreciated by 1.83 per cent against the Euro to N367.15. In the parallel market, it appreciated against dollar and the pound by 0.54per cent and 0.42per cent to N366 and N470, respectively, while the naira against euro was flat at N420.

In a deviation from the interbank and parallel market, the naira in the IEFX window lost by 0.98per cent against the dollar to N366.37. Although experts had predicted that the Monetary Committee might hold interest rate at 14 per cent and Cash Reserve Ratio at 22.5 per cent. They expressed that the weekly invention of CBN will aid the nation’s economy in exiting the current recession as the manufacturing and non-manufacturing activities continued to increase.

Managing director/chief executive officer of Financial Derivatives Company Limited, Mr. Bismarck Rewane explained to LEADERSHIP that the CBN’s rates might remain unchanged. The CBN in a notice to commercial banks announced plans to sell foreign exchange to manufacturers, airlines, fuel importers, and agriculture businesses at a special auction to clear backlog of foreign exchange obligations this week.

Researchers at Cordros capital said, the impact on the Naira will be largely reflected across segments of the foreign exchange market. Thus, we expect the Naira to appreciate further against the dollar in the week, while remaining stable against the pound and euro.”