TheCable

The naira is took its deepest dive on the interbank market since the launch of the new foreign exchange regime about a month ago.

Naira, which opened at about 294 to a dollar on Thursday, slid pass the 300-mark to trade at 310 to a single dollar on the official market — the lowest official rate in the country’s history.

The Central Bank of Nigeria (CBN) was said to have refrained from intervening in the market as the naira took its biggest daily loss in about four weeks.

Parallel market sales is already being affected by the new movement, as traders in Lagos are now trading at 377 to the dollar, as against 375 at the start of business on Thursday.

The apex bank has been criticised for intervening in the forex market, not allowing the naira to respond to the forces of demand and supply, a stance which Godwin Emefiele, CBN governor has debunked, saying the apex bank is only a player in the market.

“CBN has not been involved in interfering in the exchange rate regime. It is a flexible exchange rate regime and prices are determined based on market forces of demand and supply,” Emefiele had said.

Muhammad Sanusi II, the emir of Kano and Emefiele’s predecessor, says the bank has a “fantastic” policy document, which must be follow, arguing that the naira must be allowed to cross the 300/$1 mark before it firms.

“You have to let the market decide where the naira is going to be, to start with, before inflows come in and then when the inflows are in, you have an appreciation of the naira,” Sanusi had said.

“So you have to live with a devaluation to N300/$1 plus and then it will firm up to N270/$ or N280/$1 or whatever. But so long as you target a rate of N280/$1, you are just moving the peg.”

Based on Sanusi’s economics, the naira is expected to appreciate in the days ahead, if the CBN restrains itself from intervening in market activities.

Renaissance Capital, a Russian investment bank with presence in Lagos, had said earlier that the true value of the naira was 305 to the greenback.