THE Central Bank of Nigeria (CBN) can cut off speculators from the country’s currency market if there is consistency and clarity in its foreign exchange (FX) policy reforms.
The naira has been experiencing mild appreciation against the dollar, but experts are worried that the interventions in the FX market by the CBN may drop with time, which could give speculators a foothold.
“Naira is gradually regaining its strength. As of today, a little over 12 banks had their foreign exchange backlog cleared, and that is a good development for the market. However, we want the CBN to come clear with its reforms policy to enable speculators to stop betting on the currency market,” a senior financial analyst with Financial Derivative, Dumebi Oluwole, said on Tuesday, November 7, in Lagos while reacting to Nigeria’s currency market.
“We are not sure to what extent the CBN would continue to supply dollars to the official FX window. We need this clarity, and if there’s none, the speculators will continue to bet against the naira and keep influencing the market,” she added.
She called on the CBN to adhere to FX market fundamentals and reforms to dissuade speculators.
“Once the government is not consistent with its interventions and reforms in the FX market, addressing price distortions and the gap between the official and the parallel market rate would be difficult,” she said.
The ICIR observed that at the official window on Tuesday, November 7, the naira depreciated to close at N809.02/$1, representing a 4.06 per cent increase from the N776.14/$1 recorded on Friday, 3rd November day.
The intraday high recorded was N1100/$1, while the intraday low was N720.50/$1, representing a wide spread of N379.50/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $87.65 million, representing an 11.30 per cent decrease compared to the previous day.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.