CBN Targets Rates Convergence, As Naira Firms Further - Sundiata Tech

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Sunday, June 4, 2017

CBN Targets Rates Convergence, As Naira Firms Further

By Nse Anthony-Uko,
ABUJA, (Sundiata Post) - Having firmed to N372 to the dollar at the weekend, the Naira is set to strengthen further this week ahead of dollar sales by the Central Bank of Nigeria (CBN).
Traders say the further injection of dollars by the apex bank is an attempt to ensure the convergence of rates. Presently, the firming of the naira at the parallel market is impacting prices at the Investors and Exporters window.
From N381 which the naira has hovered at for weeks at the I&E window, the naira closed stronger at N378.56
Sources at the CBN said the apex bank plans to inject not less than $200 million by Tuesday, a move traders say would furore crash the value of the dollar on the streets
According to the sources, the CBN was not resting on its oars and remained determined to ensure a convergence between the interbank and Bureau de Change (BDC) rates soon, hence the move to continue its intervention in the interbank market.
The naira currently trades at N362 to the dollar at BDC and N360 for customers buying from banks. Last week, the CBN had intervened in the inter-bank market to the tune of $482.6 million with the Retail SMIS allocated the sum of $285.77 miĺlion while the $100 million was offered in the Wholesale SMIS auction window.
The Small and Medium Enterprises (SMEs) window got an allocation of $52 million, while the invisibles segment, comprising Basic Travel Allowance (BTA), Personal Travel Allowance, medicals and tuition fees, among others, was allocated the sum of $45 million.
Speaking with newsmen at the weekend, the CBN Acting Director, Corporate Communications, Isaac Okorafor, affirmed that there were plans by the CBN to make necessary interventions in the forex market, in line with its earlier resolve to achieve forex rates convergence and liquidity in the market.
On how the bank hoped to sustain its interventions, Okorafor said the CBN had enough forex to meet the requirements of all customers, who had genuine need for the dollar. He also expressed optimism that the current policy of the Bank and the cooperation of all stakeholders would check the unwholesome activities of speculators.
Meanwhile, the external reserves of the country further depleted as it currently stands at $30.32 billion as at May 31, down from $30.49 billion which it was on May 25, 2017. This indicates a $165 million depletion within five days bringing the total depletion in the month of May to 2.08 per cent.

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