Naira appreciates ahead of new CBN policy

(June 18, 2016) The naira continued its appreciation in value on Friday trading at N351 against a dollar at the parallel market in Lagos, Nigeria’s commercial hub and nation’s capital, Abuja. The weakened naira has rallied from N375 to N351 in just two days following the Central Bank of Nigeria’s (CBN) announcement of a new foreign exchange policy and allowing the naira to float.

The policy takes effect on Monday. The naira sold at N362 on Thursday, a day after the announcement by Governor Godwin Emefiele and closed at N351 Friday.

The N197-$1 official rate pegged by the CBN will be officially scrapped on Monday.

Traders told viewed that the naira will continue the rally through the weekend against the dollar and other major currencies as speculators continue to sell hard currencies into the market ahead of the commencement of the new forex policy of the CBN on Monday.

The IMF, EU, financial analysts, economists and stakeholders have lauded the new policy saying it would rejuvenate the economy and make scarce foreign exchange available both on the short and long term.

The naira’s rebound came as the Central Bank of Nigeria (CBN) mopped up liquidity through Treasury Bills which it sold at higher rates.

Prior to the commencement of the policy on Monday, the apex bank had mopped up liquidity in the banking system, selling long dated Treasury Bills at higher yields than in the secondary market.

Traders said the CBN sold N205.9 billion worth of one-year bills Friday at 13.5 per cent, compared with the secondary market rate of 10.81 per cent and had offered N78 billion in bills on Thursday.

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