Naira Jumps as CBN Issues FX Rate Control Update

Naira Jumps as CBN Issues FX Rate Control Update

The Nigerian naira strengthens at the official window where investors and exporters of goods and services consummate foreign currency-denominated transactions. In the open market, exchange rates continue to fluctuate to the disadvantage of FX users seeking to close quick deals that local banks could not support easily.

FX rates were positively affected by expected FX inflows from deals consummated by NNPCL while government palliative support to 36 states and FCT boosted market morale further.

After the official devaluation of the local currency in June, there have faced multiple market-related pressures stemming from a weak supply side as a result of the dearth of US dollar inflows into the economy. 

At the investors and exporters FX window, the Nigerian Naira appreciated by 2.53% against the US dollar, closing at a rate of N740.67 from N759.86. Nigeria’s government is probing Godwin Emefiele, suspended Central Bank governor for infractions and fraudulent activities under his watch as the apex bank chief.

Emefiele had run noses against political elite desire by taking the decision to demonetise the local currency, and reduce flows of naira supply. In the parallel market, the naira also appreciated by 5.49% to N860. 

FX Rates improvement was supported by twin effects of a $3 billion NNPCL deal with Afrexim bank and the FX price verification update released by the apex bank yesterday.

The CBN introduced FX price verification system designed for importers to have access to forex. The apex bank in a statement from its Trade and Exchange Department said a price verification report from the portal is now mandatory for all Form M requests while it takes effect from August 31, 2023.

The statement read, “Following the successful conduct of the pilot run and various trainings held with all the banks, the Central Bank of Nigeria hereby announces the Go- Live of the Price Verification System (PVS)

“All applications for Forms M shall be accompanied by a valid price verification report generated from the price verification portal.

“For the avoidance of doubt, by this circular, the price verification report has become a mandatory trade document precedent to the completion of a Form M.”

While urging all authorised dealers to inform their customers of the development, the CBN also said any case of infraction would be appropriately sanctioned. Accretion into FX reserves is still unimpressive as the gross position remained below $34 billion amidst growing outflow related to letters of credit.

In the global oil market, Brent crude rose 1.22% to $84.47 per barrel, while WTI crude gained 1.59% to $80.64 per barrel.  Oil futures remained above $84 per barrel, driven by concerns over global energy demand amidst recession fears from China and hawkish commentary from the US Federal Reserve. #Naira Jumps as CBN Issues FX Rate Control Update

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