Central Bank of Nigeria, CBN adjusted its exchange rate pegon Thursday to 196.90 naira against the dollar from the 196.95 set last week, data on the bank’s website showed.
Dealers said the CBN had sold dollars to the interbank market at the new rate the previous day, dismissing the move as a currency appreciation as it wasn’t market driven, but noted it could signal the coming of a new policy.
The naira opened trade on thin volumes at 198.90 to the dollar on the interbank market. It traded at 220 naira on the black market on Thursday.
“This is not a real appreciation …. the central bank is probably trying to guide the market. Its most likely an indication to a new policy change in the FX market,” one commercial bank treasurer said.
The central bank made a tiny adjustment to the exchange rate peg last week, with one analyst saying the move may indicate that the bank is beginning to think about how to loosen its currency regime.
Another dealer said the central bank may be trying to guage the level at which it can defend the naira, but noted that the bank was running low on ammunitions to do this.
Last week JPMorgan said it may eject Nigeria from its Government Bond Index (GBI-EM) by the year-end unless Africa’s biggest economy restored liquidity to currency markets in a way that allowed foreign investors tracking the benchmark to transact with minimal hurdles.
Nigeria’s foreign reserves fell to $29.18 billion by June 9, down 1.65 percent from last month, as the central bank burned cash to defend the local currency.

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