Naira firms up, stock market gains, as new forex policy takes effect

The naira moved to 515 per dollar on Tuesday, following the introduction of new policy actions by the Central Bank of Nigeria (CBN). The naira, which was trading at 520 to the dollar on Monday, after falling from 510 the previous week, firmed on Tuesday evening, at the parallel market.

Nigerian Stock Exchange (NSE) also gained over N740 million on Tuesday, following the policy implementation. The capital market saw its market capitalisation move from N8,738,370,947,609.24 on Monday to N8,739,112,337,168.61, while all share index gained a few more points on the trading floor, to hit 25,251.63

About 24 hours later, the apex bank, which went to the market with $500 million, sold $370.9 million to 23 banks at rates between N315 to N360 per dollar. On Monday, the CBN introduced fresh policy actions, which seek to provide more foreign exchange for Nigerians, seeking its use for personal and business purposes.

Lukman Otunuga, research analyst at FXTM, describe the policy adjustment as a logical move by the apex bank. “With the dollar demand for school fee payments overseas and personal travel allowance enforcing downside pressures on the parallel market, the move by the CBN to sell dollars to retail users via commercial lenders seems logical,” he said.

The CBN says it remains committed to ensuring adequate liquidity flows in the foreign exchange market.