Global body gives CBN’s FX policy pass mark, as Parallel crash to N368
The exchange rates in the parallel market has been on free-fall since February 2017 when the CBN started the forex market interventions.
This assessment was contained in the latest Fitch report which noted that since the introduction of the IEFX “window” at the end of April 2017, there has been an increase in investors’ confidence and improvement in Fx liquidity of commercial banks in the country.
The body remarked that the window has indirectly eased liquidity pressure earlier expressed by commercial banks since Q2 2016. This FX pressure had occasioned a reduction in importations and forcing many Nigerian banks to extend some of their matured trade finance obligation.
“In our opinion, NAFEX offers a more transparent alternative to accessing FC than is available through the other foreign-exchange markets in the country,” the report said.
With the introduction of this window and others, there has been stability in both official and the black market. The exchange rate in the parallel market has been on free-fall since February 2017 when the CBN started the forex market interventions.
As at Thursday, June 15, 2017, the parallel rate of dollar/naira fell to at N367/$1 after opening at N376/$1 on Wednesday, June 14, 2017.
Analysts and Bureau De Change (BDC) operators have noted that the continued interventions by the CBN have a strengthening of the naira in both parallel and official markets.
The report also noted that “even though the new rate adds to the multiplicity of rates already available, the market-determined rates of the window has led to its greater success than other windows.”
Fitch also noted that the IEFX window has had positive impacts on operations and performance of commercial banks in Nigeria. It has helped to draw back funds into the banking sector and moving the exchange rates towards convergence.
On convergence, Nigeria’s foreign exchange market achieved a partial convergence between the Investors and Exporters’ forex market and parallel market on Wednesday, June 14, 2017, as US dollars was quoted in both markets at N367/$1.
Analysts noted that this is an indication of rising confidence in the forex market, occasioned by the sustained interventions by the CBN.
These impacts were as a result of the close monitoring and minimal interference of the Apex bank in the disbursement of forex to needed customers.
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