The Deputy Governor, Economic Policy Directorate, Central Bank of Nigeria (CBN), Dr. Kingsley Obiora, has disclosed that the apex bank was planning further loosening of controls, “in the next couple of weeks,” to help determine new level for the naira.
Bloomberg, quoted Obiora to have said this in interview in Rabat, Morocco.
“Market already operating on willing buyer/willing seller basis; the central bank has not entered market as a buyer or seller. We are allowing the market itself to set a price,” Obiora said.
According to him, the central bank expects official and parallel-market exchange rates to converge soon.
“I don’t think it will take a long time for that to happen,” he added.
Obiora said analysis done by the International Monetary Fund and international banks suggesting the naira was not as weak as the parallel market indicates was correct, with official rate still below parallel market rate.
He noted that the backlog of unmet dollar demand was, “very manageable,” adding that reforms being implemented by President Bola Tinubu may result in economic-growth rate doubling next year from about three per cent this year.
“From next year, when this president will have his own budget, his own policies will be fully on track, I completely expect us to do five to six per cent next year,” he said.
Meanwhile, the parallel market naira exchange rate stood at N755/$1 yesterday, stronger than the N770/$1 it closed on the Investors and Exporters’ (I & E) window.
The naira depreciated by N107 to a dollar on the I & E window on Monday, from the N663/$1 which it closed last Friday, compared with the N770 to a dollar it closed on Monday. The highest spot rate on the I & E FX window was N799/$1.
However, analysts have predicted that the ongoing volatility in the I & E FX window would continue in the short-term as the currency strives to reach a balanced state and settle at a true value.
Speaking to THISDAY, the Head, of Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle Olubunmi said: “There would be a lot of volatility in the market. Last week, there was a day it closed at N702/$, then it came down to N663/$, so we would always have that volatility at least for now.
“It’s not entirely clear, unlike the 2016 policy that they came up with a policy that was extremely clear. This is not that detailed. What are we doing officially, are we floating the rate? Are we using a crawling peg because the consequences of floating are too dire? I don’t think it is something we can even afford especially as those with FX have not been incentivised to come into the market.”
Nume Ekeghe
