Nairametrics| The reign of Godwin Emefiele as CBN Governor will perhaps go down in history as one of the most tumultuous and controversial ever. He has presided over a period where Nigeria has faced its worst economic crisis ever and has faced the wrath of most Nigerian and foreign investors for his handling of the forex crisis.
By February, 2017 the exchange rate had hit an all time high of N520 as calls grew for a change of strategy and possibly change of personnel at the top of the apex bank. One month later, the exchange rate will now gain as over 35% closing below N400 for the first time since August 2016.
Nairametrics has provided coverage of the FX rate like no other business news website and we have put together a timeline of events that may have led to the biggest rally the naira has seen at the black market on record.
Tuesday March 28th 2017
CBN agrees to sell FX to BDC’s at N360 now allowing BDC’s resell at N362 to retail investors.
Monday March 27th 2017
The CBN issues a new guideline instructing banks to sell forex to the retail end of the market at N360/$1. Banks will now purchase forex from the CBN at N357/$1.
Friday March 24th 2017
The exchange rate finally fell below N400/$1 for the first time since August 23rd 2016. The parallel market closed at N390/$1.
Monday, March 20th 2017
CBN continues to flood the market with FX, and sells another $243 million between Monday 2oth and 23rd of March. The exchange rate falls to $400 to the dollar for the first time since August 2016, sending the black market in a frenzy.
Tuesday – Thursday March 14th – 16th, 2017
Sources reveal to Nairametrics that banks were already awash with FX and was not reducing the level of FX purchase from the CBN. The CBN will hear none of that and went ahead to sell another $440 million within 3 days to the FX market. Exchange rate, plummets again to N455/$1
The naira will close the week at N448/$1
Monday March 13th, 2017
CBN Governor announced winner of Vanguard Man of the Year. He also goes on the offensive against those calling for a free float of the naira. He reminds them that Egypt, which had just floated its currency, saw inflation rate rise above 30%. Exchange rate is now N459.
Thursday, March 9th, 2017
CBN sells another $170 million and exchange rate strengthens to N465/$1
Monday March 6th & Tuesday March 7th 2017
CBN sold $367 million and $100 million to commercial banks on Monday and Tuesday respectively. Exchange rate closes at N465 at the parallel market.
Friday, March 3rd 2017
The CBN sold another $350 million to commercial banks. It also reiterated its request that banks open retail outlets and desks at major airports. Our mystery shoppers also revealed most bank branches did not have forex to sell. The exchange rate was back up again to N475. Weary analysts wondered if the recent gains is a dead cat bounce.
Tuesday, February 28th 2017
The spokesperson of the CBN, Isaac Okorafor. was heard on radio warning market players and keepers of dollars to make hay and sell their holdings to avoid heavy losses. The exchange rate closed at N460/$1 on Tuesday.
Monday, February 27th 2017
- Rencap issued a statement claiming that using one of their Real Effective Exchange Rate (REER) models – the 22-year model which corresponds to a period when oil averaged $55/bl – implies fair value for the naira at N370/$, which via inflation should become N400/$ by end-2017.
- Exchange rate remained at N455/$1 but experienced high volatility. Some sold at below N450 in other parts of the country.
- The CBN also sold another $180 million to commercial banks
- BDC made their first reaction to the exchange rate. The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, said on Friday that the new policy was “a long awaited liberation the Naira needed to check speculators from manipulating the exchange rate for their selfish ends.”
- According to him, the market is already adjusting at a faster pace as the Naira continues to appreciate across board in all the major segments of the market.
- Gwadabe however emphasized that BDCs were not competing with commercial banks in the sale of the proceeds of International Monetary Transfer Services Operators to end-users. He also complained that the new directive did not provide a level playing ground for the banks and the BDCs to operate.
Friday, February 24th 2017
The exchange rate closed the week at year high of N455 to the dollar. The naira had gained about N60 in one week.
Going Forward
Can the CBN continue to defend the naira? Will the CBN float or devalue now? What is the likely effect of the drop in crude oil prices? Are speculators truly obliterated or are they buying back low to sell high? Will foreign investors see this as a positive development or would they still hang on till we float?
Nairametrics will provide a detailed response to each of these questions throughout the course of the week. This timeline will be updated so make sure to bookmark this page.
The timeline is compiled by our research team and sourced from articles featured on Nairametrics.
Sale of dollars by the CBN since the new policy licked in.
| Tuesday February 21st – $417 million |
| Thursday February 23rd – $231 million |
| Monday February 27th – $180 million |
| Friday March 3rd – $350 million |
| Monday March 6th – $367 million |
| Tuesday March 7th – $100 million |
| Thursday March 9th – $170 million |
| Tuesday March 14th – $190 million |
| Wednesday March 15th – $150 million |
| Thursday March 16th – $100 million |
| Monday March 20th – $143 million |
| Thursday March 23rd – $100 million |
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