CBN denies interference in floating FX market •As naira closes at N282.02/$ at interbank market

The Naira on Monday closed slightly stable at the spot rate of N282.02 as against N282.03 to the dollar it traded on Friday last week. It however reversed last week’s gain of N4.733 to the British Pounds as it traded for N374.8062 compared with Friday’s close of N375.4772 to the Pounds Sterling.

The local currency also closed slightly stable against the Euro as it traded at N314.3736 compared to Friday’s N314.3983 to the Euro at the interbank market.

This is just as the Central Bank of Nigeria (CBN) has said it is not true that the it has been interfering in the floating foreign  exchange market, stressing  that it is a flexible exchange rate regime where prices are determined by market forces of demand and supply.

Similarly, the naira at the parallel market strengthened against the American dollar. The local currency which had depreciated on Friday, July 1 , gained strength to trade at N342/$1 on Monday, July 4 as against  N351 it ended on Friday.

While some currency traders attributed the strengthening to  reports that the Central Bank of Nigeria (CBN) will resume dollar sales to Bureau De Change operators, others said it was panic buying by some users of foreign exchange who fears that there might be scarcity of the greenback as a result of the two-day public holiday when street traders would be returning to their homes for Muslims’ Salah celebration.

“A lot of dollar came into the market today because there are reports that the CBN will commence sales of dollar to us. So those who have are selling theirs, hoping to get back from CBN,” one dealer said

Meanwhile, the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele while answering questions at a press briefing in Lagos on Monday said  that the CBN not been interfering in the foreign exchange market but rather, participates like every other market participant .

“But it is important to emphasize that CBN remains a player in that market. Indeed till now CBN is a major player, where there are other autonomous sources and other sources that are coming in.”

“We are very gratified and hopeful that this is happening because this is what we want. We want a situation where over time the CBN will step back and more autonomous sources  will get into the market so that we can conserve our reserves.

“That is what we are hoping at this time. I want to confirm that it is not true that the CBN is interfering in determining mechanism. But what we are saying is that we are a stakeholder and we are till now still a major player but we will like to see a situation where gradually within, and outside more and more people can  come into the market and take over the determination of the pricing of the foreign exchange market in Nigeria,’ Emefiele said.

However, despite floating the local currency, the CBN says it will intervene in the market from time to time to ensure proper regulation, assuring the nation that the naira would settle at 250/$1. Ever since the introduction of the new forex regime, the CBN, has been selling  forex on the interbank market to ease dollar shortages and provide importers the hard currency to pay for the products they bring into the country.