Naira Strengthens as CBN Boosts FX Sale to Manufacturers

In line with its determination to ensure improved foreign exchange (FX) liquidity to critical sectors of the Nigeria economy, the Central Bank of Nigeria (CBN) has once again given access to requests for FX valued at N1,003,373,891.75 through the interbank window.

The move is to enable respective industries procure industrial raw materials and machine spare-parts.
The effect of the FX liquidity boost was immediately felt on the parallel market segment of the FX market as the Naira pared some of losses friday.

Specifically, the Naira appreciated by N10 to close at N485 to the dollar on the parallel market yesterday, compared with the N495 to the dollar it stood the previous day.

Analysts said FX rate on the parallel market is extremely volatile. Meanwhile, the forex utilisation figures for December 2016 released yesterday revealed that the industrial raw material group got the highest share of N483,075,669.82, approximating to 48.1 per cent.

Figures from the CBN report for December also showed that the petroleum and the aviation sectors received N372,116,111.79 and N123,666,001.06 or 37.1 per cent and 12.2 per cent respectively, while agriculture received N24,516,109.09 or 2.1 per cent.

Commenting on the development, the Acting Director, Corporate Communications Department, Mr. Isaac Okorafor, reiterated the commitment and resolve of the Bank to continue to ease the foreign exchange pressure of these critical sectors through forward sales under the new Flexible Exchange regime.

It will be recalled that the CBN in September and October 2016, supported these critical sectors with $660million and $867million equivalent of forex to source industrial raw materials and spare-parts through the interbank Forex market.

The CBN had on Monday asked banks to submit bids for a special FX auction to clear the backlog of matured outstanding dollar obligations for select sectors of the Dollar, which included fuel importers, airlines, raw materials and machinery for manufacturing firms and agricultural chemicals.