NAIRA TO APPRECIATE AS SPECULATORS EYE RAND

Naira set to appreciate as speculators eye rand, others

By Tony Chukwunyem 

Naira set to appreciate as speculators eye rand, others
The naira could appreciate on the parallel market in the coming days due to recent forex measures announced by the Central Bank of Nigeria (CBN), foreign currency dealers said yesterday.

The naira has exchanged at N362/$ on the parallel market in the last two days after recovering from N363 per dollar last week. The local currency’s strengthening comes amid reports yesterday that Derivative traders were hedging their bets on five emerging markets where they see the greatest probability of declines in the next month.

According to Bloomberg, the currencies of Turkey, Brazil, Mexico, Russia and South Africa are seeing the world’s biggest increases in their implied volatility gauges this quarter, amid the worst period for developingnation currencies since China’s shock devaluation in the third quarter of 2015.


 
Commenting on the naira’s current strength, Managing Director of a Lagosbased Bureaux De Change (BDC), who did not want to be named, attributed it to the CBN’s announcement last week, merging BDCs’ dollar buying rate with that of banks.Prior to that announcement, the BDCs had been buying dollars at N358/$ and selling at N360 per dollar.

They had campaigned to be allowed to buy dollars at N357 per dollar and sell at N360/$, a request, which was granted by the CBN on June 1 even though the apex bank mandated them to buy forex thrice weekly-Mondays, Wednesdays and Fridays.

The BDC boss said, “Yes, we have been asking for the CBN to review our dollar buying rate to align with that of the banks. However, now that we have achieved this, many BDCs are finding it difficult to comply with the directive that we must buy forex from the CBN three times every week due to liquidity challenges. As a result, some of them are even prepared to sell at N359/$ instead of the N360 per dollar which the CBN allows us to sell at.”

Interestingly, he noted that the situation showed that the CBN was achieving its objective of ensuring adequate forex liquidity in the system and making it convenient for eligible travelers to easily access forex.

He also noted that with some BDCs selling at N359/$, parallel market operators have been forced to bring down their rates, leading to an appreciation in the value of the naira and further narrowing of the gap between the parallel markets’ and BDCs’ rates.
https://newtelegraphonline.com/2018/06/naira-set-to-appreciate-as-speculators-eye-rand-others/