Naira Strengthens on I&E FX Window, Operators Rule Out Manipulation

Nume Ekeghe in Lagos and James Emejo in Abuja

The naira yesterday appreciated on the Investors and Exporters’ (I&E) foreign exchange (FX) window as it closed at N741/$1 yesterday, compared to the N769/$1 it closed last Friday.

This indicated a notable N28 appreciation, marking the highest gain recorded in a day since the unification of the FX rates.

However, at some parallel market points in Lagos surveyed yesterday, the nation’s currency depreciated slightly to close at N775/$1 from N770/$1 it traded over the weekend, indicating a drop by N5.

In an interview with THISDAY on the disparities in the lowest and highest spot rates, analysts ruled out manipulation, saying transaction on the I&E window reflect a willing buyer-willing seller model.

The model, which was re-introduced by the Central Bank of Nigeria (CBN) in its latest reform measures introduced to reposition the FX market allows all eligible transactions to access foreign exchange at the I&E window and is aimed towards curbing price arbitrage among others.

The analysts explained that some of the trades were carried out at the lowest spot rates in transactions where companies sell to their subsidiaries.

Head, of Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle Olubunmi, dismissed alleged manipulation of transactions.

He said, “The market is a willing buyer- willing seller and it’s not being manipulated. Yes, CBN intervenes and sells but it’s not in a forceful way to accept a price. The high rates are again as a result of the willing buyer, willing seller model.”

He added that some of the trades recorded at the lower spectrum are usually of companies selling to their subsidiaries.

He added: “Example are companies that export but also have other subsidiaries that do other businesses; so they sell to themselves at a low rate.”

Furthermore, Managing Director/chief business officer, Optimus by Afrinvest, Ayodeji Ebo, said he does not believe there are manipulations by the apex bank.

He said: “The NAFEX rate that comes out at the end of the day is the average rate. So as long as the rates get high or low, it is just minute volumes going at that price.”