CBN Deputy Governor (Operations), Mr. Tunde Lemo, told THISDAY at the weekend that the central bank would continue to defend the naira.
On Naira Depreciation Last Week
For instance, at the interbank market, the naira has so far slumped by N5.15, to N161.82/$1 on Friday, compared to the N156.67/$1 it stood on January 2, 2013. Also, the FMDA data showed that at the Bureau De Change (BDC) segment, the domestic currency has tumbled by a total of N4, from the N158/$1 it was at the beginning of the year, to N162/$1 on Friday. At the parallel market points, the local currency now sells for N162.50/$1, representing a decline by N4, as against the N158.50/$1 it was at the beginning of the year. However, the naira is still at N155.75/$1 at the WDAS.
On Where the Naira Should Be
According to the central bank’s exchange rate band, the naira should float roughly within a range of N150 and N160 to a dollar. This unfortunate development is threatening the relative stability recorded by the naira in the past 18 months as well as the accretion of the external reserves. Nigeria’s external reserves stood at $48.479 billion as at June 13.
What The CBN Is doing ( Lemo)
“The CBN is watching. Remember we said the exchange rate (which remains stable, but not fixed) should oscillate within a band, and the market dynamics still confirm same. There is no cause for alarm, as foreign reserves remain robust, covering 11 months of import. We shall continue to have good forex inflow, confirming sustained confidence in the Nigerian economy,” he said.
On The Impact on the Stock Market
Responding to enquiries on the likelihood of an impact of profit taking by foreign investors on the Nigerian Stock Exchange (NSE) on the naira, Lemo said: “That is a one-off. We have to watch the market for some time before we jump into conclusion. There may be a little bit of profit-taking but the gilt and capital market yields are still attractive to foreign investors, especially with Nigeria’s positive economic outlook.