Naira rises as FMDQ introduces reference rate for new FX window

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By Odunewu Segun

The Financial Market Dealers Quote, FMDQ on Monday, introduced a reference exchange rate for the newly introduced special foreign exchange window for investors and exporters.

FMDQ explained that NAFEX is the FMDQ reference rate for foreign exchange (FX) activities in the Investors’ & Exporters’ FX Window and is designed to represent Spot FX market rates in the Window. NAFEX rates will be generated independently and objectively and published every business day at 12 noon or at a time advised by FMDQ.

According to a statement from the CBN, “transactions eligible to access foreign exchange in the new window include: Invisible transactions (excluding International Airlines Ticket sales’ remittances), Loan repayments, loan interest payments, dividends/income remittances, capital repatriation, management services fees, consultancy fees, etc; Bills for collection and; Any other trade-related payment obligations (at the instance of the customer).”

The statement added that “the supply of foreign currency to the window shall be through portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to Naira. The CBN shall also be a market participant at this window to promote liquidity and professional market conduct.”

Meanwhile, the Naira rose to $382 per dollar in the parallel market even as the Central Bank of Nigeria (CBN) injected another $246.2 million into the foreign exchange market.

A survey of the parallel market revealed that the parallel market exchange rate which closed on Friday at N385 per dollar, dropped to N382 per dollar due to expectation of dollar sales to Bureaux de change (BDCs) by the CBN.

The apex bank continued with its intervention in the foreign exchange market yesterday by offering $246.2 million to authorized dealers at the forex auction in the interbank wholesale window, Small and Medium Enterprises (SMEs) and invisibles segments.

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A breakdown of the total offer indicates that the sum of $150 million was auctioned at the wholesale window while SMEs and invisibles got $52 million and $44.2 million respectively.

Confirming this development, Acting Director, Corporate Communications, CBN, Mr. Isaac Okoroafor said that the forwards sales would be concluded in the days to come. He, however, added that the CBN will continue its weekly sale to dealers in the Bureau de Change (BDC) segment this week in order to guarantee onward sale to end users.

According to him, the Bank’s continued interventions in the different segments had guaranteed availability to individuals and business concerns.  He disclosed that the Bank was satisfied with the feedback it received concerning the response of Small and Medium Enterprises (SMEs) to access forex from the new CBN window.

President Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe commended the introduction of the new window saying it would boost forex supply in the country. He said it will also discourage speculation and other malpractice in the market.

 

 

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