CBN Adjusts Naira Peg Again | Independent Newspapers Limited
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CBN Adjusts Naira Peg Again

Posted: Jun 12, 2015 at 4:00 am   /   by   /   comments (0)

The Central Bank of Nigeria (CBN) adjusted its exchange rate peg on Thursday to N196.90 against the U.S Dollar from the N196.95 set last week, data on the bank’s website showed.

Dealers said the CBN had sold Dollars to the interbank market at the new rate the previous day, dismissing the move as a currency appreciation, since it was not market driven, but noted it could signal the coming of a new policy.

The Naira opened trade on thin volumes at N198.90 to the Dollar on the interbank market. It traded at N220 on the black market on Thursday.

“This is not a real appreciation …. the central bank is probably trying to guide the market. It’s most likely an indication to a new policy change in the FX market,” one commercial bank treasurer told Reuters.

The CBN made a tiny adjustment to the exchange rate peg last week, with one analyst saying the move may indicate that the bank is beginning to think about how to loosen its currency regime.

Another dealer said the central bank may be trying to guage the level at which it can defend the naira, but noted that the bank was running low on ammunitions to do this.

Last week JPMorgan said it may eject Nigeria from its Government Bond Index (GBI-EM) by the year-end unless Africa’s biggest economy restored liquidity to currency markets in a way that allowed foreign investors tracking the benchmark to transact with minimal hurdles.

The nation’s foreign reserves fell to $29.18 billion by June 9, down 1.65 per cent from last month, as the apex bank burned cash to defend the local currency.