Fitch gives Emfiele’s signature FX Policy pass mark

After so much criticism for its forex policies from international analysts, the Central Bank of Nigeria has finally received an endorsement for one of its signature FX policies.

The latest Fitch report says that since the introduction of the foreign exchange “window” at end-April aimed at investors and exporters, liquidity in the country’s commercial banks have significantly improved.

The window, Fitch says, has indirectly eased the liquidity pressures earlier experienced in commercial banks by boosting forex supply. The pressures had resulted in reduced imports, forcing several Nigerian banks to extend maturities on their trade finance obligations. However, with the introduction of the window, investors have been more willing to invest in Nigeria due to what they perceive as a fairer mechanism through which they can sell forex to willing buyers.

“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. Although 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.

According to the report, for banks, this is positive for the banks as it helps to draw funds back into the banking sector and could aid a rates convergence. With minimal interference from the CBN, Fitch believes that the window will continue to impact positively on forex liquidity in banks.

Rate convergence

Nairametrics black market exchange rate tracker also reveals the Naira has continued to strengthen closing at N365/$1. The investor window closed at N376 on Wednesday, bringing the disparity between the black market and investor window to 3%, indicative of a rate convergence. The strengthening of the naira has also attracted comments from government officials and supporters of the CBN Governor, who believe that his policies are showing positive results.

Popular government official, Dr Joe Abah, who regularly tweets, tweeted comments suggesting that critics of Emefiele apologize to him.