The Central Bank of Nigeria (CBN) is targeting a N200 to dollar exchange rate in the parallel market.
The naira which yesterday traded at N330 to dollar in the parallel market is expected to appreciate speedily, as the impact of the CBN’s measures to stabilise the currency volatility in the parallel market begin to materialise.
President, Association of Bureau De Change Operators of Nigeria (ABCON) said the N330 rate in the parallel market is an improvement from last week’s rate when the naira exchanged for N391 to dollar.
The strident calls by the IMF and some foreign interest for Nigeria to devalue its currency and the artificial spike in Forex rate created by Bureau De Change operators appears to have tanked. This has been linked to a complex and integrated currency management approaches deployed by the Central Bank of Nigeria (CBN).
According to a top source in the apex Bank, “The aim of CBN is to ensure that the divergence between the official and parallel rate does not exceed N3, so we are looking at a parallel market rate of N200/$ because the downward trend in the pressure on the naira will be sustained.
“The CBN has the capacity to sustain the downward pressure and will deploy further currency management initiatives, while capitalising on fiscal policies of the federal government to remain in support of non-devaluation of the Naira. The current stand of the federal government on Nigeria’s legal tender is Non-Devaluation. It will be unwise for anybody to be hoarding dollars because we can assure you that naira appreciation is going to trend upwards going forward.”
So far, the CBN in a bid to manage the pressure on supply has deployed over $11.7billion to support Agricultural Sector, SMEs, manufacturers and others. This has reduced patronage of black market by end-users and has forced rent seekers to dump the greenback thereby creating a dollar-glut in the black-market.
The source noted that it has been observed that most of the imports that were draining forex resources have since found local substitutes with attendant savings in forex and shortage of demand for the greenback, which was fuelling the pressure, this is also coming on the heels of the CBN instruction to commercial banks to publish allocation of forex to end-users. This has in recent times ensured that the real sector of the economy and genuine users for education and medicals have been able to access Forex at official rate.
Industry analysts have also described the development as a game changer for majority of local manufacturers in Nigeria. The manufacturers acknowledged that the impact of CBN policy on forex since, its inception has more than doubled their productive capacity, with attendant benefits in terms of expansion to meet increasingly higher demands for their products and services.
The Analysts said, “Conveniently, since the CBN foreign exchange policy came into existence, production capacity by local manufacturers has increased from 50 per cent to 70 per cent. This has impacted on their propensity to increase exports with higher volumes which is expected to also earn Nigeria commensurate higher foreign exchange earnings.”
Speaking further, the analysts are of the opinion that the policy has helped the local manufacturers to realise the urgent need to expand because of increasing demands for their products.
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