Naira stabilises at parallel market – NAN

The naira on Monday stabilised against the dollar at the parallel market, newsmen report.

The Nigerian currency traded between N380 (buying rate) to N385 (selling rate) on Monday afternoon, maintaining the same rate as at Friday.

The naira closed at N495 to pound sterling and N415 to Euro at the same segment.

At the Bureau De Change (BDC) window, the naira was sold at N362 to the dollar, while the pound sterling and the Euro closed at N490 and N420, respectively.

Trading at the interbank window saw the naira closed at N305.95 to the dollar.

Traders commended the CBN for sustaining liquidity at the foreign exchange market as market volatility was not in the interest of the economy.

NAN reports that the CBN had remained resolute in boosting liquidity in all the segments of the foreign exchange market.

The apex bank, had on Friday, created a special window for investors and exporters to have uninterrupted access to foreign exchange, a move stakeholders described as the right direction.

Central bank injects $246.2m for wholesale, SMEs, invisibles – Today

CBN

The Central Bank of Nigeria (CBN) on Monday, April 24, 2017, offered the sum of $246.2 million to authorized dealers at the forex auction in the interbank wholesale window, Small and Medium Enterprises (SMEs) and invisibles segments.

A breakdown of the total offer indicates that the sum of $150 million was auctioned at the wholesale window while SMEs and invisibles got $52 million and $44.2 million respectively.

The Bank’s spokesman, Isaac Okorafor, confirmed the offer and sales on Monday, disclosing that the forwards sales would be concluded in the days to come.

He, however, added that the CBN will continue its weekly sale to dealers in the Bureau de Change (BDC) segment this week in order to guarantee onward sale to end users.

According to him, the Bank’s continued interventions in the different segments had guaranteed availability to individuals and business concerns.

He disclosed that the Bank was satisfied with the feedback it received concerning the response of Small and Medium Enterprises (SMEs) to access forex from the new CBN window.

He said the CBN was particularly determined to ease the challenges hitherto encountered by small manufacturers hence the move to provide them with easy access to forex.

“SME operators no longer have to patronize or source foreign through unofficial windows and no more pressure on either the BDCs or any other unofficial source with the opening of the special window,” he added.

It will be recalled that the CBN, also last week, created a Forex window for investors and exporters, which it named: “Investors’ & Exporters’ FX Window”.

The CBN circular, which announced the creation of the new window, disclosed that the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

Analysts Upbeat about New FX Window for Exporters, Investors – Thisday

dollar to naira

Obinna Chima

The special foreign exchange (FX) window for investors, exporters and end-users that was recently created by the Central Bank of Nigeria (CBN) as well as the new index – the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) – is expected to engender liquidity in the market, analysts at Ecobank Nigeria have stated.

They also noted that the NAFEX would engender flexibility and transparency in the pricing of naira-settled OTC FX Futures and other derivatives in the market.

But, a report by the Ecobank team predicted that this might push up the strike price of naira-settled OTC FX Futures to around N360-N375 to a dollar, thereby mirroring the current price for invisible transactions.

In the immediate, they anticipated that FX supply to the market is expected to rise, possibly by around 75 per cent, even as they projected that portfolio investors and exporters would likely re-enter the market.
This in turn is expected to improve liquidity and strengthen the naira.

“Overall, the impact of the circular would largely depend on how much flexibility, transparency and liquidity the CBN is willing to inject to support FX spot market. As such, the CBN might need to intervene more in the interbank FX spot market and other segments of the market,” they added.

The Central Bank of Nigeria issued the new FX circular on 21 April to announce a special window for investors, exporters and End-users in the foreign exchange market. While the new FX circular aimed to boost liquidity in the FX market and ensure timely execution and settlement of transactions, it introduced a new financial market fixing: NAFEX, for settlement of FX derivatives.

The new regulation was aimed to accommodate all FX obligations by increasing the number of permitted FX transactions to include: loan repayments, loan interest payments, dividend/ income remittances, capital repatriation and any other eligible invisibles transactions including miscellaneous payments, among others.
The market participants are portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to naira.

Importantly, the introduction of the NAFEX) has replaced the Nigerian Inter-bank Foreign Fixing (NIFEX), which hitherto was used as index for pricing Naira-settled OTC FX Futures, with significant implications for the operations, methodology and pricing of new Naira-settled OTC FX Futures transactions.

“The decision to close all outstanding Naira-settled OTC FX Futures contracts of April 2017 to March 2018 Maturities as at 18 April 2017 might open another window of uncertainties that will affect market confidence, stability and integrity of Naira-settled OTC FX Futures pricing.

“In the immediate, FX supply to the market is expected to rise, possibly by around 75 per cent as portfolio Investors and Exporters (who hitherto are not disposed to the official market due to pricing) re-enter the market, which in turn will improve liquidity and strengthen the naira,” Ecobank analysts added.