The Miracle That Salvaged The Crashing Naira at Parallel Market

Naira - Dollar

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As the Nira continues to fall, both economist and speculators predicted a further fall to about 600/dollar at the parallel market only for the intervention of the Vice President, Yemi Osibanjo to prove economist wrong.

On February 20, 2017, the Central Bank of Nigeria (CBN) reviewed itss foreign exchange policy following marching orders from the national economic council headed by Vice President Yemi Osinbajo. Osinbajo and finance minister Kemi Adeosun mandated the CBN headed by its Governor Godwin Emefiele.

‎Five days later, the CBN rolled out a raft of new forex policies. “In continuation of efforts to increase the availability of foreign exchange in order to ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions, the Central Bank of Nigeria (CBN) is providing direct additional funding to banks to meet the needs of Nigerians for personal and business travel, medical needs and school fees, effective immediately.

“The CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate,” a statement signed by the apex bank’s Director of corporate communications, Isaac Okorafor, read.

Days after the new policy, dollar was still not available as ordered with the banks still holding on to the green back making, forcing the naira to be sold at 516.

But with pressure from the apex bank on the commercial banks, checks at Bureau De Change outlets at the Lagos airport, showed that the Naira is now exchanging for N400 to the dollar, N520 to the Pound and N420 to the Euro, as at 12 noon, Friday February 24, 2017.

The Naira may well trade for N300 to the dollar before mid-March, if prevailing favourable conditions persist.

Besides the CBN’s new interventionist policy, price of crude oil has risen to $56/barrel in the international market and Nigeria’s crude oil output has gone past the 2million bpd (barrel per day) against the previous poor levels of 1.7million bpd–which had to do with activities of pipeline vandals.

Recall also that at the best of times, Nigeria was averaging 2.2million bpd.

Meanwhile, ‎analysts say the improvements of the past couple of days in the country’s forex market can be sustained if the CBN and deposit money banks show more transparency in their dealings and if the apex bank stops rigging its own forex market.

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