As the Monetary Policy Committee (MPC) convenes its second meeting for the year today and tomorrow, analysts in the financial services sector expect it to retain the key monetary rates, while consolidating on the gains recorded in exchange rate, inflation and increase in oil production.
The US Dollar is set to crash further in the coming week as the Central Bank of Nigeria (CBN) plans to inject more forex into the market to meet the requests of genuine customers. The CBN has so far kept to its earlier assurance to continue to supply enough forex to guarantee liquidity in the forex market.
The Bank’s spokesman, Isaac Okorafor, gave the assurance at the weekend, noting that the CBN was committed to ensuring that the authorized dealers got sufficient supply to meet the demands of authentic customers of banks.
While disclosing that the Bank had since February 2017 offered over $1 billion to the interbank market, he expressed optimism that stability had been restored to the market, with individuals now being able to easily access forex to address personal and business allowances.
A cursory view of the summary of the CBN intervention in the interbank market over the past two months, shows the highest bid rate was N360/$1, while the lowest was N315/$1.
The pressure on the local currency has eased as it has appreciated by 14.3 percent since the introduction of the new foreign exchange policy by the Central Bank of Nigeria (CBN) in February 20, 2017.
The CBN had directed the deposit money banks to provide PTA and BTA within 24 hours and Medical and School Fees within 48 hours to meet demand, and this has helped to shore up the value of naira which is currently hovering around N450 per dollar from N520/$ in January at the black market.
The National Bureau of Statistics (NBS) last week released the inflation report, which moderated to 17.8 percent Year-on-Year from 18.7 percent in January 2017.
There was improvement in the domestic oil output, which has seen production improved to 2.1mb/d according to NNPC.
“As the Committee sits to deliberate on Monday and Tuesday, we are of the view that the MPC will maintain status quo on all rates whilst reiterating the need for the CBN to focus on improving foreign exchange liquidity in the Foreign Exchange market especially as hinted by the new Economic Recovery and Growth Plan (ERGP) document”, analysts at Cowry Asset Management limited said.
The CBN last week continued its liquidity injection drive, especially in the aspect of Special Wholesale Intervention Forward Sales for maturing Letters of Credit (LCs), while banks continued to sell PTA, BTA and school fees.
Consequently, the naira exchange rate firmed up at the parallel market, as Naira/Dollar exchange rate opened the week at N460.00/US$1.00 but appreciated to N450.00/US$1.00 by Thursday and Friday.