Posted By: Collins Nweze
Foreign investors are pushing for the adoption of the interbank rate as the only official exchange rate, The Nation has learnt.
The interbank rate closed on Friday at N315.10/$1. It has remained the most stable exchange rate in the last six months.
The new demand by investors followed earlier calls by the International Monetary Fund (IMF) and stakeholders that the CBN unify exchange rates. The Executive Board of the IMF’s Article IV Consultation on Nigeria had in March, urged the authorities to remove restrictions and multiple currency practices.
In a report released at the weekend, Afrinvest West Africa Limited, an investment and research firm, confirmed investors’ demand on the CBN to adopt interbank rate, and said the investors are insisting that although the CBN’s policies over the past months have led to a convergence between parallel and official market rates, the last leg of the reform which is replacing multiple exchange rates with a transparent interbank market is still pending.
It said the opening of different Forex windows and targeted intervention by the CBN, which is in excess of $5 billion in the last four months, have had a positive knock-on impact on capital liquidity and resulted in a stronger naira in the parallel market.
Since the start of a prolonged global oil price drop in the second half of 2014, the Nigerian economy has recorded a significant downturn in performance as plummeting government revenues and the resultant forex crisis dragged the economy into its first recession in 25 years. The country currently has not less than 10 different exchange rates, which many stakeholders are calling for their harmonisation.
The Afrinvest, said analysis of the naira/dollar movement in the first half of this year showed that at the naira traded flat within N315.10/$1 to N305.90/$1 at the official rate. At the FMDQ’s Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) exchange rates segment, naira appreciated 2.5 per cent since the launch of the window from N375.70/$1 to close at N366.41/$1 while rate at the parallel market also appreciated 33.2 per cent from N490/$1 at the beginning of the year to close at N368/$1 at the weekend. The NAFEX is a polled rate derived from FX rates submission, from a selection of Authorised Dealers participating in the Investors & Exporters FX window.
Speaking on the call for exchange rate convergence, former Executive Director, Keystone Bank, Richard Obire, said the CBN should move towards unified exchange rate or narrow the rate. He said that multiple exchange rate creates distortion in prices and hurts businesses