Naira Rises as Reps Move to Investigate Banks
On account of a moderate increase in US dollar supply, the Naira appreciated by 1.05% to close at N1,418.78 per greenback at the official window, according to data from the FMDQ platform.
The improvement in the local currency exchange rate came following notice by the House of Reps to investigate banks for allegedly failing to comply with the apex bank’s direction on net open positions. However, in the parallel market, the Naira traded weak on Wednesday to close at N1,475 against the US dollar, widening FX gap despite an effort to end speculative trading.
The House of Representatives is to investigate non-compliance by banks and financial institutions with the Central Bank of Nigeria (CBN) directives on the Net Open Position (NOP) limits. The House of Representatives said that four banks are holding approximately $5 billion in surplus foreign exchange.
Following the adoption of a motion by Rep. Babajimi Benson at the plenary in Abuja on Wednesday, the House mandated its committees on Banking Regulations and Banking Institutions to conduct the investigation. He stated that there had been a steady rise in the rate of the US dollar in comparison to the naira, adding that such an astronomical rise had been caused by diverse market forces.
He added that the rise was also a sequel to certain economic policies adopted by the government, including the liberalisation of the dollar. Reps said speculative activity by commercial banks and certain financial institutions has further exacerbated the harsh economic situation in the country.
The CBN directed that the net open position limit of the overall foreign currency assets and liabilities of banks shall not exceed 20 per cent short or 0 per cent long of shareholders’ funds. According to data from FMDQ, Nigeria’s autonomous foreign exchange market (NAFEM) turnover increased by +189.1% or +USD853.6 million to USD766.5m on Friday as bank sold down their US dollar holdings.
The NAFEM window recorded an inflow of USD19.56 million. There was no injection made by the CBN for the 17th consecutive week. Last week, foreign portfolio investors (FPIs) accounted for 2.1% of the total US dollar volume, non-bank corporates accounted for 60.8% exporters accounted for 32.5%, and others accounted for 4.7%.
In the global commodity market, WTI crude futures advanced by 0.70% to $73.83 per barrel on Wednesday. Also, the Brent Crude closed higher at $79.02 per barrel. #Naira Rises as Reps Move to Investigate Banks# Chinese Yuan Weakens to 7.1063 Against U.S. Dollar
