The Central Bank of Nigeria said its new currency window for investors had handled $2.2 billion of trade in six weeks, with the apex bank accounting 30 percent of that trade itself as it worked to keep the window operating.
“Average trading on investors’ window is now $2.2 billion in the first six weeks of its introduction with our participation restricted to less than 30 percent,” CBN spokesman, Isaac Okorafor said
Before the investors’ window was introduced in April, the CBN was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014.
The regulator has allowed investors to trade the naira at rates set freely between buyers and sellers, hoping to increase the amount of dollars available in Nigeria – but effectively introducing yet another exchange rate to the five already in operation.
Nigeria has an exchange rate for Muslim pilgrims going to Saudi Arabia, a retail rate set by licensed exchange bureaus, and a rate for foreign travel and school fees, in addition to its official and black market rates.
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The stock market has reacted positively to the introduction of the investor window, rising 34 percent in six weeks with volumes more than doubling. The rally also partly follows MSCI’s recent move to boost Nigeria’s weighting on its frontier index, analysts say.
“When we started intervening in the market, the question was sustainability but we will ensure the process is sustained,” Okorafor said in Lagos.
The naira was quoted at 372.70 on the investors’ window on Thursday. It traded at 365 on the black market and was stuck at around 305.25 to the dollar on the official window.
“Today we are gradually achieving convergence between the investor window and invisible window (FX rate for retail users),” Okorafor said.
He said the CBN would ensure it sustains intervention to support the naira and that the bank was comfortable with its dollar reserve level of $30.3 billion.