Naira in steady rally, gains 15k on new forex regime
• May go for N300 at interbank market
• NEC endorses new policy
Nigeria’s currency, the naira, yesterday continued to gain more value against foreign currencies a day after the Central Bank of Nigeria (CBN) released the details of the flexible policy for the management of the foreign exchange in the country.
Checks among Bureaux de Change ( BDCs) operators in Abuja indicated that the naira gained 15 kobo and 17 kobo respectively between Wednesday and yesterday following the apprehension and latter release of the details of the policy which restricted the market to a single window, thereby blocking opportunities for easy round- tripping and arbitrage by speculators .
Ahead of the takeoff of the interbank operations under the new regime of flexible exchange rate policy, there are indications that the naira float will terminate at N300 per dollar beginning from Monday.
And barely 24 hours following the introduction of the new foreign exchange regime, the National Economic Council (NEC) rose from its 69th meeting yesterday endorsing the policy and describing it as a means of boosting the nation’s economy.
Capital market participants who spoke with The Guardian yesterday noted that expectations are high; that the new policy would enable the high currency volatility risk to subside, thereby encouraging foreign investors to take advantage of the opportunities in naira-denominated instruments.
The exchange rate against the naira fell from the N370 / $ level it traded on Wednesday to N365/ $ yesterday morning and by evening settled at N355 / $, a development that excited some NDCs operators, who before now had resorted to the importation of hard currencies from Britain, Saudi Arabia and until recently, neighbouring Ghana.
One of the operators, Prince Nuhu., who is the Managing Director of Dommo BDC Ltd. located at the Wuse Zone 4 District of the Abuja City told The Guardian that the new flexible forex policy of the CBN is a welcome development as it is capable of assisting the naira to gain more value and address the rising spate of inflation in the country.
The new policy, which remains under the ‘managed float’ system, is also billed to operate with a circuit breaker, to contain any eventual free-fall during trade.
Already, a forum slated for yesterday in Abuja between currency dealers and Financial Market Dealers Association, may have determined the “fair value” for the naira exchange against major currencies, especially the dollar, which would benchmark forex trading at inter-bank on Monday.
Meanwhile, a renewed strategy to remain in business has been scripted by the bureaux de change operators, as they plan a N600 billion capital base as a group.
The capital base forms a major part of the requirements for primary dealership in the new forex policy. Of the N600 billion capital base requirements, N200 billion will represent shareholders fund, while N400 billion stands as evidence of foreign assets, to be admitted into the primary dealership of the new foreign exchange business.