The Central Bank of Nigeria (CBN), on Thursday, adjusted its exchange
rate peg to N196.90 against the dollar from the 196.95 set last week,
data on the bank’s website showed.
Dealers said the CBN had sold dollars to the interbank market at the
new rate the previous day, dismissing the move as a currency
appreciation as it wasn’t market driven, but noted it could signal the
coming of a new policy.
The naira opened trade on thin volumes at 198.90 to the dollar on the
interbank market. It traded at 220 naira on the black market on
Thursday.
“This is not a real appreciation …. the central bank is probably
trying to guide the market. Its most likely an indication to a new
policy change in the FX market,” one commercial bank treasurer said.
The central bank made a tiny adjustment to the exchange rate peg last
week, with one analyst saying the move may indicate that the bank is
beginning to think about how to loosen its currency regime.
Another dealer said the central bank may be trying to guage the level
at which it can defend the naira, but noted that the bank was running
low on ammunitions to do this.
Last week JPMorgan said it may eject Nigeria from its Government Bond
Index (GBI-EM) by the year-end unless Africa’s biggest economy restored
liquidity to currency markets in a way that allowed foreign investors
tracking the benchmark to transact with minimal hurdles.
Nigeria’s foreign reserves fell to $29.18 billion by June 9, down
1.65 percent from last month, as the central bank burned cash to defend
the local currency.
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