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Naira Strengthens as CBN Boosts FX Sale to Manufacturers

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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.

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