Todaysgist gathered that the Naira appreciated remarkably to its highest value this year on Friday following recent policies put in place by the Central Bank of Nigeria (CBN) to encourage foreign direct investment in the country.
While the Naira appreciated significantly by N4.45 against the dollar in just one week at the interbank market, it also climbed by N4 at both the Bureau De Change (BDC) and parallel markets respectively.
The apex bank had announced the lifting of a requirement that foreign investors must hold government securities for at least one year. The policy which became effective last Friday is expected to spur foreign investments as well to boost dollar supply in the country. Similarly, the banking sector watchdog had said that all authorised currency dealers are only allowed a maximum of $250,000 to BDCs per week.
However, findings by THISDAY Sunday showed that the Naira strengthened significantly against the United States of America dollar, to its highest position across various segments of the forex market on Friday. Data made available by the Financial Market Dealers Association of Nigeria (FMDA) showed that at the interbank market, the naira gained N4.45 remarkably against the dollar in just one week, to close at N152.10/$1 at the close of business on Friday, compared with the N156.55/$1 it stood the preceding Friday. Similarly, at the BDC and parallel where the local currency has largely been fixed at N159/$1 and N160/$1, it recorded remarkably performance to close respectively at N155/$1 and N156/$1.
The CBN explained that the move was also aimed at achieving a stable currency so that it can win the battle against double-digits inflation in the country.
Deputy Governor, Financial System Stability, CBN, Dr Kingsley Moghalu, was quoted by Reuters to have said that the apex bank hopes to use the removal of restriction on capital to stabilise the Naira. “We do expect a slight appreciation of the naira value before the end of the year, that's our projection and that's our hope," he added.
Managing Director/Chief Executive Officer, Blue-Wall Bureau De Change Nigeria Limited, Mr. Lucky Aiyedatiwa, in an interview with THISDAY, said the CBN initiated the policies based on the persistent pressure at the forex market.
“Right now, the government want to attract foreign investments. For instance, in Ghana, if you bring in any funds, it takes like three years for you to take it out, yet there are a lot of inflows of foreign direct investments in that country, because they have the enabling environment and infrastructure. So these new move is to make the environment very attractive for investors. By this, definitely the Naira is going to appreciate and there will be stability in the forex regime,” Aiyedatiwa added.
Demand for the greenback at the bi-weekly Wholesale Dutch Auction System (WDAS), also fell significantly by 92 per cent to a total demand of $497.118 million for the two trading sessions held last week. The drop in demand represented a total value of $457.817 million, compared with a total demand of $954.935 million recorded at the two session held the preceding week.
Financial Market analysts at Morgan Stanley had forecast last week that the Naira will record significant appreciation before the end of next year; even as they projected that the Nigerian economy may reach about $400 billion by the end of the decade and could overtake South Africa by 2025.
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