What CBN Does to Stabilise Market as Naira Continues Dip Against Dollar
- The naira's performance in the foreign currency market has been unstable throughout the past week
- This indicates that the local currency is still under pressure, even in spite of the CBN's attempts to stabilise the market
- To relieve liquidity worries, the CBN has earlier declared operations in the foreign exchange market
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Over the previous week, the naira's performance on the foreign exchange market has been inconsistent. This shows that despite the Central Bank of Nigeria's ongoing efforts to stabilise the market, there is still pressure on the local currency.
Source: UGC
The naira depreciated significantly in the parallel market, while it enjoyed a minor increase in the official market, closing at 1,599.94/$ on Thursday, from 1,603.78/$ the week before, The Punch reported.
Researchers at Cowry Asset Management Limited claim that by putting weekly FX defence plans into place, the CBN continued to take an interventionist approach.
“These efforts yielded modest results in the official market window, where the Naira appreciated by 0.24 per cent over the week, closing at N1,599.94 per US dollar on Thursday, compared to N1,603.78 the previous week.
“However, sentiment in the parallel market painted a more fragile picture. There, the naira depreciated significantly by 4.66 per cent week-on-week, ending the week at an average rate of N1,610 per dollar.
“This discrepancy between the official and unofficial market rates underscores the sustained demand pressure on the local currency, particularly from importers and informal market participants, who often struggle to access official FX channels,” said the weekly investors’ note.
In order to alleviate liquidity concerns, the CBN had previously declared operations in the foreign exchange market.
Analysts predict that while the Central Bank continues its weekly intervention program, foreign exchange tensions will gradually ease throughout the holiday-shortened week.
Olayemi Cardoso, the governor of the Central Bank of Nigeria, has reiterated the CBN's unwavering dedication to openness, consistency, and regaining public trust via traditional monetary policy changes.
Source: UGC
Speaking at a strategic investment forum hosted at the Nasdaq MarketSite in New York, Cardoso said, “We inherited a crisis of confidence, but we chose a different path. We’re not turning back.”
Experts at Meristem Research also believe that the Memorandum of Understanding signed between Nigeria and South Africa in the past week will increase investment and generate additional revenue in the long term.
Nigeria stock market opens new week on a negative note
Legit.ng reported that Nigeria’s equities market opened the week on a negative note, by 0.03 percent or N21 billion on Monday, April 14.
Data from the Nigerian Exchange Limited (NGX) showed that the market All-Share Index (ASI) slipped to 104,529.62 points from 104,563.34 achieved on Friday, last week.
Also, market capitalisation decreased from N65.706 trillion to N65.685 trillion.
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Source: Legit.ng
