By Nse Anthony-Uko
(Sundiata Finance) — Central Bank of Nigeria (CBN) has been advised by foreign investors to adopt interbank rate as the only official foreign exchange rate in the country if it hopes to get more investors in to the struggling Nigerian economy.
This request was confirmed by investment and research firm Afrinvest West Africa Limited in a report it released at the weekend.
Afrinvest disclosed that the investors want the central bank to quickly replace its multiple exchange rates with a transparent interbank market.
This is not the first time such call was being made.
In the past, the central bank had been advised in the past to stop its multiple forex windows and adopt a single rate.
Part of those who made this call included former CBN Governor, Mr Charles Soludo; the International Monetary Fund (IMF); and others.
However, the foreign investors have commended the apex bank for coming up with policies in the past few months, which have led to a convergence between the parallel and official market rates.
The CBN made this possible with the regular release of forex to different segments of the market, crashing the Dollar from nearly N600 in February 2017 to N365 in July 2017 at the black market.
At the market on Monday, the official CBN exchange rate was N305.95 to the Dollar, while its was N365 to the Dollar at the parallel market.
In the Afrinvest’s report, 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.
It pointed out that analysis of the Naira/Dollar movement in the first half of this year showed that at interbank, Naira traded flat within N315.10/$1 to N305.90/$1 at the official rate, while at the FMDQ’s Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) exchange rates segment, Naira appreciated 2.5 percent since the launch of the window from N375.70/$1 to close at N366.41/$1.
The report said the parallel market rate also appreciated by 33.2 percent 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.