New CBN rule shores up Naira
Recent efforts by the Central Bank to stabilize the Naira seem to have paid off. The Central Bank had issued a cease and desist order to Oil Companies operating in Nigeria via a circular released on its website last Wednesday. The circular instructed oil majors to stop buying dollars via the CBN auctions and instead source their foreign currency needs from their crude oil sales income.
The currency gained as much as 2.44% in intra-day trading on Friday, the largest single day appreciation since late 2009.
According to an analyst at Meristem, Olusola Soji Gege, “the new Central Bank of Nigeria rule seems to have a calming effect on the demand for dollars in the system, and this policy should help to stabilize the Naira, at least in the near-term”.
The Naira is expected to continue to appreciate against the dollar next week.
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