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Naira appreciates to 386/dollar

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Oyetunji Abioye

The naira has appreciated to 386 against the United States dollar as the Central Bank of Nigeria continues to supply dollars into the foreign exchange market.

The local unit closed at 386/dollar on Friday, having closed at 390/dollar daily in the past one week.

The CBN had supplied over $380m into the forex market a week ago.

According to financial and currency experts, the naira’s outlook remains stable in the near term as the regulator steps up efforts to improve dollar liquidity and achieve exchange rate convergence.

The naira firmed to about 305.60 to the dollar on the interbank market on Friday, up from 305.1/dollar on Thursday.

The Global Economist, Renaissance Capital, Charles Robertson, described the official rate of the naira as a “fair value”, suggesting that the value might need to be weaker to attract foreign investors into the country.

According to him, exchange rate issues are making Nigeria to underperform among its peers in East Africa.

He, however, said the country would make significant improvement in ease of doing business and corruption data over the next one year owing to recent positive steps by the Federal Government.

A currency expert at Ecobank Nigeria, Mr. Kunle Ezun, believes the CBN’s policies are yielding result. He said the foreign exchange window tagged ‘Investors/Exporters FX Window’’ created by the apex bank recently was a good development.

Ezun, however, said it was too early to determine the amount of forex inflows doing through the window.

“We expect the naira to trade within the prevailing band in the coming days, but investors are still worried over the multiplicity of exchange rate in the market,” one senior currency trader told Reuters.

The CBN has been intervening aggressively since February to try to narrow the spread between the official and black market rates and has sold more than $4bn.

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