The Central Bank of Nigeria, CBN, significantly changed its policy and reinstated the 43 items it had previously prohibited from its foreign exchange supply window, there were contrary trends in the financial market yesterday.
At the close of trading in the Investors and Exporters (I&E) window of the foreign exchange market on Friday, the local currency traded in the range of N764.51/ $1.0 down from N759.20/ $1.0 the previous day. In the parallel market the local currency depreciated to N1045/ $1.00 from N1043/ $1.00.
However, in the stock market, traders hinted that the policy change by the CBN signals further boost of confidence in the economy and this led to a 10 base point rise in the All Shares Index, ASI, to 67,200.69, the highest point since September 22, 2023.
Commenting on the stock market development, analysts at CardinalStone Finance, a Lagos based investment banking firm, said: “We opine that the positive market sentiment may not be unconnected to the CBN lifting restrictions on the 43 earlier FX-restricted items and reiterating its commitment to improving FX liquidity.
Also dissecting the FX policy reversal, analysts at Meristem Securities Limited, another Lagos based investment firm, said, “While this is a welcome development aimed at easing FX pressure and curbing arbitrage activities in the parallel market, its short-term impact may be minimal owing to the limited FX inflow.”
Meanwhile, an economist and Director, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has applauded the decision of the CBN to lift the ban on official sale of foreign exchange (forex) on 43 items, describing it as a move in the right direction.
CBN, had in a circular on Thursday, restated its commitment to boosting liquidity in the forex market while removing the earlier restrictions it imposed on some 43 items from accessing forex through its official windows.
