Following the announcement by the Central Bank of Nigeria (CBN) on Tuesday after its two day Monetary Policy Committee (MPC) meeting that it would adopt a flexible exchange rate policy, traders said the apex lender directed commercial banks to fund their naira accounts and submit bids for dollars on Thursday at 197.
The CBN had said it will come up with guidelines on the policy within days that is going to see a shift from a peg for the naira, but traders in Lagos have pointed out that this has been creating uncertainty in the market.
The apex bank has said it will introduce a flexible interbank market from a de facto peg of around 197 and retain a window for funding critical transactions, creating a dual exchange rate.
Traders said it was not clear whether the bank will settle Thursday’s bid at 197, adding that quantity of dollars sold has been declining. The central bank sold around $110 million last week, down from around $150 million previously, traders say.
The naira is trading around the pegged rate on the official interbank market on Thursday at 197.50 to the dollar but is quoted at 350 on the black market.
One-month non-deliverable forwards (NDFs) showed the naira trading at 266 naira per dollar, after hitting 276 naira per dollar on Wednesday.
But according to a Professor of Financial Economics at the University of Uyo, Akwa Ibom State, Leo Ukpong, who recently expressed regrets delayed in decisions taken by both the fiscal authority and the monetary authority as measure to address ailing nation’s economy.
He said, “the country has waited too long, before coming up directives because if we had done that a long time ago, the Naira would have stabilize somewhere around N200 to N250 at most but look at it right now, we are talking about N360 may be by the time the market stabilizes with the floating rate is going to be close to N400 per dollar.”