The Central Bank of Nigeria, CBN, yesterday, Monday, intervened in the official market (Investors & Exporters) selling $25 million at N444 per dollar Foreign Portfolio Investors, indicating N33 or 8% devaluation when compared with the I&E closing exchange rate of N415.10/$ yesterday.
The CBN also increased exchange rate for the 150-Days Forward by the same margin to N453.15 per dollar.
Data from FMDQ showed that the CBN intervention rate of N444/$ and 150-Days Forward rate of N453.15 represented the highest transaction exchange rates yesterday.Data from FMDQ also showed that $200.4 million was traded in the I&E window yesterday.
Confirmed this development analyst at Lagos based investment firm said: “In a surprise twist, the CBN moved the rate at which it intervenes in the I&E FX market with sales of c.$25 million to Foreign Portfolio Investors, FPIs, devaluing the Naira by 8% (N33/$) and selling intervention spot and 150-day forwards at N444.00/$ and N453.15/$ respectively.
“Total value traded improved by 122% day-on-day, D/D, to close at c.$200 million traded.”The effect of this evaluation remains to be seen as a CBN is yet to revise its other intervention rates for sales to retail demand (PTA/BTA & Invisibles).
“However, the parallel market showed some immediate improvement as the cash rate gained N2.00 to close at N571.00/$ while the transfer rate remained stable at N575.00/$.
“We think this move to devalue might be part of a larger coordinated effort by the CBN to attract foreign flows to support its supply of the greenback from the sale of the country’s forex reserves and expect a bit of volatility in the interim as more adjustments occur across the several market segments.”