The Central Bank of Nigeria, CBN has finally freed the Naira so as to allow interplay of demand and supply to determine its rate on the Nigeria Interbank Foreign Exchange, NIFEX.
This is coming as a result of the pressure mounted by the financial markets and analysts on the apex bank to allow the naira to be truly market determined so as to attract foreign investors.
The central bank will equally fund the one-month forward contracts of $697 million this week, meaning that authorised dealers that bid on behalf of their customers for the contracts in June would be making a kill of almost N10 to the dollar, given that the naira fell to N292.25 on the interbank market last Friday.
On the first day of trading under the revised rules for the NIFEX on June 20, the CBN had intervened in the market through the Special Secondary Market Intervention Sales (SMIS) to clear the backlog of $4.02 billion pent-up demand for FX.
According to the CBN, it sold $532 million on the spot market and $3.487 billion in the forwards market. A breakdown of the $3.487 billion forward sales by the central bank showed that $697 million was for one month (1M), $1.22 billion for two months (2M) and $1.57 billion for three months (3M).
