Against the backdrop of a sustained appreciation of Naira against the Dollar, the Federal Government, FG, seems to have gained control of developments in the foreign exchange market.
The local currency, yesterday, appreciated to N1,340 per dollar in the parallel market, up by about 0.65 per cent from N1,350 per dollar on Tuesday.
In the official market, the Nigerian Foreign Exchange Market (NAFEM), Naira recorded a bullish run with about 6.2 per cent gain at N1,300.43 per dollar against N1,382.95 the previous day.
However, the margin between the parallel market rate and NAFEM widened to N40.43 per dollar from N32.95 per dollar on Tuesday, indicating a significant supply gap in the market.
But Vice President Kashim Shettima, yesterday, assured that the Naira would continue to stabilize in the coming weeks and months.
The VP’s hint appears to have been validated by the position of the CBN’s Monetary Policy Committee, MPC, which a day earlier raised its Monetary Policy Rate, MPR, by another 200 bases points (BPS) to 24.75 percent.
The MPC had, less than one month ago raised the rate by an unprecedented 400bps in an effort to tame inflation.
But both successive rate hikes, according to analysts, were spurring an inflow of foreign exchange in form of Foreign Portfolio Investments, (FPIs), meaning that the government is prioritizing exchange rate stability above the inflation rate which has hit a 28 years high at 31.7 per cent last month.
Commenting on the MPR, analysts at Meristem Securities Limited, a Lagos-based investment house, noted yesterday, “The MPC further emphasized the need to address inflation while reaffirming its commitment to maintaining stability in the foreign exchange (FX) market. “Moreover, the committee acknowledged the recent stability in the FX market, alluding this to the CBN’s resolution of FX backlogs and its recent transparency-focused market reforms.
“Ultimately, the increased yields are expected to attract foreign investment into the domestic fixed-income market which may help to stabilize the exchange rate”.
Meanwhile, Shettima gave assurance on Naira stability at the inauguration of the National Design and Innovation Competition, held at the Presidential Villa, Abuja.
The event was organised by the Interior Designers Association of Nigeria, IDAN, to spur entrepreneurship and creative ventures among youth.
At the peak of the Naira valuation crisis early last month, the naira exchanged for as high as N1900 to the dollar, but the currency gradually appreciated, following some monetary policy measures taken by the Central Bank of Nigeria, CBN.
Shettima stated yesterday that the government would continue to implement policies and programmes to stabilise the naira.
He also said President Bola Tinubu’s administration would continue to address issues of food, nutrition, and insecurity, and commended the pivotal role of youths in creativity, adding that the government would continue to support their aspirations,
The Vice President announced plans to include young innovators in the government’s $617.7 million investment in the Digital and Creative Enterprises (i-DICE) programme.
Earlier in a remark, the leader of the delegation and founder of IDAN, Titi Ogufere, revealed plans to train one million youths in furniture production and industrial design.
According to him, the training will be conducted by IDAN, in collaboration with the federal ministry of arts, culture, and creative economy. “The initiative will feature design competitions and workshops where participants can showcase their prototypes.”