Naira finding ‘true value’ as CBN removes spread limit – The Cable

The Nigerian naira is inching towards its true value at the interbank market as the Central Bank of Nigeria (CBN) has removed the initial 50 kobo spread limit, in an attempt to boost liquidity.

The naira closed on Friday at 290.25 to the dollar at the interbank market, after the spread peg was removed, falling further to 294/$1 as at 2:07pm on Monday. Intraday trading has the naira revolving between 283 and 294.

On the parallel market, naira was trading between 360 and 366 at leading commercial hubs across the nation.

According to sources, the apex bank may reintroduce the spread limit, after the market may have become “sufficiently liquid”.

Lukman Otunuga, the FXTM research analyst, believes that the move by the apex bank could be the first true step to shielding the economy from external shocks.

“The elevated concerns over a potential technical recession in Nigeria have forced the Central Bank of Nigeria to relinquish its stealth peg to truly allow the Naira to be determined by the natural forces of supply and demand,” he said.