Forex rates converge amidst depreciation projection

.As Investor’s widow closes at N360.31/$1

.Official FX market at N305.80/$1

The Nigerian currency, Naira, on Wednesday, consolidated on the gains recorded at the various segments of the foreign exchange (Forex) markets, leading to a convergence of rates amidst depreciation projection against the United States dollar, between official forex market, parallel market, Investors and Exporters (I&E) FX window and Deposit Money Banks (DMBs) rates, investigation by The Daily Times has revealed.

Due to continuous interventions in the forex market, the local currency, as of yesterday trading activities at the I&E FX window, stood at N360.31 to the Dollar, the same rate it traded on Tuesday, even though it began trading at a better rate of N360 against N360.22 recorded the previous day.

In our fact findings, our correspondents who visited some parallel market operators in Lagos and Ogun States discovered that the Naira, closed at an appreciable rate N360 per dollar, depending on the bargaining power of the customer.

This was against N363 to the Dollar exchanged in some part of the country, however, better than N363 per the Greenback, but stabilised against other major currencies Pound Sterling and Euro at N510 and 446, sold respectively at the unofficial forex market.

The local currency, at the autonomous window recorded an improved daily turnover of $212.31million against $167.25m traded the preceding day, data obtained from the FMDQ OTCshowed.

Consequently, forex dealers believed that series of interventions by the Central Bank of Nigeria (CBN) had impacted the market positively, leading to relative stability in the exchange rate and the achievement of rates convergence.

Trader at the unofficial market said that collapse of rates was skewed in favour of the parallel market, as there were no conditions for the sale of forex unlike the Bureaux De Change (BDCs).

They believed that parallel market had witnessed increased patronage as Forex buyers now have easier access to it without prior verification of travel documents as operated by the BDCs.

Meanwhile, PricewaterhouseCoopers has said that naira may depreciate against the dollar at the I&E FX window to N386 from the current average of N360.

In its economic outlook for 2018, which was released on Tuesday, the professional services firm said increased foreign exchange demand ahead of the 2019 general election might make the local unit to weaken.

According to analysts at PwC, with the outlook on the oil price and level of reserves accretion ($40.6bn), we expect that the CBN would maintain the exchange rate peg of 305/dollar at the CBN window.

“In H2’18, we estimate a seven per cent exchange rate depreciation in the I&E window to 386/dollar, as FX demand increases and foreign investments slow ahead of the 2019 elections.

“Overall, the CBN maintains its multiple exchange rate regime, sustaining its intervention in the various FX markets’ the report read in part”, the report stated.

On the other hand, the Bankers committee of the apex bank on the same day that PricewaterhouseCoopers projected a depreciate of the Naira against the dollar, directed commercial banks operating in the country to stop commission charges from Nigerians on sales of Personal Travel Allowance (PTA), Basic travel Allowance (BTA), among others, as foreign exchange rate hamonised at N360 to the US Dollar.

The bankers committee, which includes all the banks,’ Managing Directors and senior officials of the apex bank, said that the uniform sales at the invisible market will serve as palliative measures for individual Nigerians to access foreign exchange without commission charges by banks for such forex sales.

“One of the things that we agreed at the meeting was something we measured that will be palliative for individual in the economy. It was agreed that for foreign exchange at banks sale with CBN authority to their clients- PTA, BTA, school fess and for medical bills.

“Hence forth, banks are to charge N360 per dollar and there will be no commission by banks for such sales. It is to make sure there is a uniform sales across the banking industry”, a representative of the committee noted.

It would be recalled that the forex market earlier this week boosted by a total sum of $210 m injected into the interbank foreign exchange market.

A breakdown of the intervention showed that the sum of $100m was offered to authorized dealers in the wholesale segment of the market, while the Small and Medium Enterprises (SMEs) segment received the sum of $55m.

Customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allocated the sum of $5.55

The Banks Acting Director, Corporate Communications Department (CCD), Mr. Isaac Okorafor, who had earlier confirmed the figures, reassured the public that the Bank would continue to intervene in the interbank foreign exchange market in line with its quest to sustain liquidity in the market and maintain stability.