The Central Bank of Nigeria on Thursday adjusted its exchange rate peg to N197 against the United States’ dollar from the N196.95 it set last week, according to data on the bank’s website.
The forex rate adjustment on Thursday was the fifth since the CBN introduced tight controls on the forex market in February, Reuters reported.
The adjustment came on the heels of a further decline in naira to 243 against the dollar at the parallel market on Thursday.
The persistent decline of the naira in the parallel market followed the introduction of new measures by the central bank last month, restricting access to hard currency at the interbank in a bid to conserve dwindling foreign exchange reserves.
The bank said at the time that it would sell dollars only at N198 to customers through the interbank based on direct orders by banks.
The naira traded at N199.50 to the dollar on the interbank market on Thursday, compared to the N197 per dollar rate at which it closed on Wednesday.
Forex dealers said the outcome of the Monetary Policy Committee meeting of the CBN due on Friday (today) could affect the naira.
“We are very optimistic that the central bank would come out with some measures to support the naira at the end of its MPC meeting on Friday,” the Acting President, Association of Bureau De Change Operators, Aminu Gwadabe said.
He also said the association had met with the CBN in Abuja on Thursday to discuss the need to reverse the recent policy requesting BDCs to collect prospective customers’ Bank Verification Number before selling forex to them.
A Reuters poll showed the bank could hold interest rates for now.
The Head, Investment Research, Afrinvest West Africa, a research and investment advisory firm, Ayodeji Ebo, and his team, predicted that the MPC would take some key decisions at the meeting.
In its report on the MPC meeting, the team said, “We imagine the MPC will favour one of the following possible scenarios: Leave all policy rates unchanged and continue to adopt administrative measures to curb naira volatility while rebuilding external reserves; or increase the naira intervention rate in the interbank market and raise cash reserve requirements to 35 per cent to reduce naira liquidity that could spur FX speculation; or increase monetary policy rate by 50bps to attract foreign portfolio investment, while subsequently loosening restrictions on FX trading.
“We place a 70 percent probability on scenario one, 20 percent probability on scenario two and 10 percent on the third scenario.”
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