Naira stabilises at autonomous FX market

The naira yesterday traded stable against the dollar at the parallel and autonomous markets, the second time after the Democracy Day holiday. It closed at N347 and N350 against the greenback at both the autonomous and parallel markets.

The market was closed on Monday in commemoration of Democracy Day. On resumption Tuesday, the local currency closed at N347 and N350 against the dollar at the autonomous and parallel markets respectively.

The pressure on the local currency continued last week after the Monetary Policy Committee (MPC) introduced flexible foreign exchange market with the details of the operation yet to be released.

Yvonne Mhango, Renaissance Capital’s sub-Saharan Africa (SSA) economist, said the fixed peg at N197-199/$ would be sustained to support imports for critical sectors, as deemed by the government, such as agri-business, manufacturing, exporters, fuel refineries, and the power sector.

Godwin Emefiele, Central Bank of Nigeria governor, mentioned in the question and answer session that imports of capital goods for new investment for industries that source raw materials locally would be eligible for the ‘import critical window.’

“We expect all other FX transactions to be directed towards a new, flexible interbank FX market, which the central bank will cease funding. This market would be funded by exporters, i.e. international oil companies, and autonomous sources, in our view. We expect that alongside the unveiling of a new FX policy framework, the authorities will specify the transactions that will take place at the fixed peg window,” Mhango said in a report to BusinessDay.