By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-From all indications, the Central Bank of Nigeria (CBN) has adjusted its exchange rate from N197 set in February to N196.95 to a dollar.
This is coming on the heels of global falling oil prices and dwindling foreign reserves. At the close of today’s session, the CBN said the interbank rate was N196.95 to a dollar; this has remained so since the start of the month of June 2015.
Data available on the website of the Nigeria’s Central Bank shows that exchange rate has been adjusted to N196.95 to a dollar.
A Reuters report quoted dealers as saying that the CBN adjusted the rate at which it sold hard currency this week, affirming that the change was too small to be considered a revaluation for the naira, particularly in the face of dwindling foreign reserves, dealers said.
According to the report, dealers told Reuters the central bank had been selling dollars to the interbank market at its adjusted rate.
The report disclosed that the Nigerian local currency was trading at N198.95 to the greenback on the interbank market and between N215 to N218 in the parallel (black) market.
“By lowering the central bank rate offered to banks albeit very moderately, the central bank is adding to pressures on FX reserves … equivalent to around 4.9 months of imports,” Angus Downie, head of research at Ecobank said.
The report says Nigeria’s foreign reserves declined to $29.4 billion by June 2, down 20.1 percent from a year ago as the CBN spends cash to defend the naira.
CBN had in February of this year merged its bi-weekly currency auctions market with the interbank market and fixed the exchange rate, a move that amounted to a de facto devaluation of the naira.
In the same vein, the nation’s apex bank banned commercial banks from re-selling the apex bank’s dollars among themselves, which was an attempt to curb speculation on the naira.
It further affirmed that the Nigeria’s local currency Non-Deliverable Forwards – currency derivatives traded offshore – pointed to the local currency being priced at N221-N225 to the dollar in six (6) month’s time.
