Naira gains ground against dollar at parallel market

Ahead of Monday’s launch of a foreign exchange interbank trading window in Nigeria, the local currency gained against the dollar as dealers anticipate supply glut in line with the Central Bank of Nigeria (CBN) move for a market driven FX prices.

At the parallel market on Friday, FX dealers sold dollar at N335 and bought at N330, investigation shows. They sold at N365 as at Thursday, and bought at N360.

They also anticipate further decline ahead of Monday’s take-off of the interbank FX market.

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In a bold move that analysts expect to engender the much needed transparency and liquidity in the FX market, the CBN opted for a free-floating FX market structure.

The apex bank will on Monday start a new foreign exchange trading regime, abandoning its 16-month peg and setting the stage for the naira to rise sharply at the parallel market.

The International Monetary Fund (IMF) said it welcomes the decision of the CBN to abandon its currency peg and adopt a flexible exchange rate policy, saying this was important to reduce fiscal and external imbalances.