Naira appreciates as CBN sustains intervention
The naira last week appreciated in the parallel market and the Nigeria Autonomous Foreign Exchange Market (NAFEX).
It appreciated by 50 kobo in the parallel market as the exchange rate dropped to N367 per dollar at the close of business on Friday, from N367.50 per dollar the previous week.
The naira recorded a bigger appreciation of N2.99 in NAFEX, as the indicative exchange rate dropped from N365.02 per dollar the previous week to N362.83 per dollar at the close of trading on Friday.
Meanwhile the CBN continued its intervention in the interbank market by injecting $142.5 million on Monday.
Analysis of the intervention revealed that$100 million was sold to dealers in the wholesale segment, while $23 million was sold to the Small and Medium Enterprises (SMEs) segment.
It also sold $19.5 million to those requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA).
Also analysts at Cowry Assets Management Limited have attributed the improvement in local content in the manufacturing sector to the effectiveness of the CBN’s forex policy.
Quoting a report by the Manufacturers Association of Nigeria (MAN), they noted that local content rose to 53.17 per cent in 2016 from 48.75 per cent and 47.18 per cent recorded in 2015 and 2014 respectively.
They stated that: “This is an affirmation of the foreign exchange policies of the Central Bank of Nigeria, particularly its June 2015 policy which aims at encouraging local sourcing of raw materials by manufacturers by excluding importers of certain goods with local substitutes from accessing foreign exchange from the Nigerian foreign exchange markets.
“The foreign exchange policy was also intended to enable conservation of scarce foreign exchange as well as boosting employment generation in the country.
“We opine that, should the external sector remain relatively healthy on the back of favourable and sustainable crude oil price levels, the positive impact of the policy would be more sustainable, and manufacturers will be able to transfer the benefit of their cost savings to the final consumers via lower output charges in a competitive environment in the short to medium terms.”