Naira in mixed performance as CBN injects another $552m

Nigeria’s local currency, the Naira recorded mixed performance in the Investors and Exporters (I&E) window and in the parallel market just as the Central Bank of Nigeria injected $552 million into the forex market.

While the naira appreciated by 19 kobo in the I&E window, it depreciated in the parallel market by 30 kobo.

Data from FMDQ showed that the I&E indicative exchange rate dropped to N362.58 per dollar last week from N362.77 per dollar the previous week, indicating 19 kobo depreciation for the naira.

According to the, the exchange rate platform of the Association of Bureaux De Change Operators of Nigeria (ABCON), the parallel market exchange rate rose to N358.3 per dollar last week from N358 per dollar the previous week, indicating 30 kobo depreciation for the naira.

Meanwhile, the Central Bank of Nigeria (CBN), recently stepped up its intervention in the foreign exchange market by injecting $551.75 million into the interbank foreign exchange market.

Breakdown of the money showed that $210 million was injected into the interbank foreign exchange market, allocating $100 million to the wholesale segment, $55 million to the SME window and $55 million for invisibles.

This was complemented with the injection of another $341.75 million and CYN14.7 million on Friday through the Retail Secondary Market Intervention Sales (SMIS).

In a statement announcing the injection on Friday, CBN’s Director of Corporate Communications, Isaac Okoroafor, said that the dollar intervention was for requests in the agricultural and raw materials sectors, while the Chinese Yuan, on the other hand, was for Renminbi denominated Letters of Credit.

He further reiterated that the market continued to enjoy stability because of the regular interventions by the Bank.

He also noted that the demand management approach introduced by the Bank had yielded positive results, adding that the CBN management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange.

Meanwhile, Nigeria’s consumer price index, which measures inflation rose to 11.61 per cent in October 2019.

This was disclosed in the latest inflation report released by the National Bureau of Statistics (NBS).

According to the NBS report, inflation rose by 0.37 per cent points, higher than the 11.24 per cent recorded in September and 11.02 per cent for August 2019.

Similarly, food inflation rose to 14.09 per cent compared to 13.51% in the previous month. Meanwhile, Core inflation dropped to 8.88 per cent from 8.94 per cent recorded in September 2019.

The Bureau disclosed that the rise in the food index was caused by increases in prices of Meat, Oils and fats, Bread and cereals, Potatoes, yam and other tubers, Fish and Vegetables.

The inflation rate declined for three consecutive months to 11.02 percent in August from 11.4 percent in May.

It, however, rose in September to 11.24 due to sharp increase in prices prompted by the closure of the nation’s boarder.

This upward trend according to analysts persisted in October hence a higher inflation rate for the month.

According to analysts at Lagos based Financial Derivatives Company Limited (FDC), money supply growth also played a crucial role in stoking inflationary pressures. M2 grew by 2.22 percent in September and is expected to increase by five percent in October as banks increase lending in compliance with the CBN’s 65 percent Loan-Deposit-Ratio (LDR) directive.

“Average opening position of the interbank money market spiked by 75.41 percent to N326.04 billion. Money supply has a direct relationship with the general price level. In September, broad money supply (M2) grew by 2.22 percent to N27.66 trillion.

Also citing the impact of the continued border closure, they said: “Data from our most recent survey of commodity and food prices suggests a significant expansion in the prices of staples such as Rice, Poultry, and Oil in October.