The Naira fell by 0.6% to the dollar as foreign portfolio investor’s return to the nations fixed income market. The Nigerian currency fell to a record low of N169/$ at the interbank market right after the suspension of the Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi and subsequently rebounded to trade at N160.81/$.
The inflation fell from 8% in January to 7.7% in February, thus remaining within the CBN’s 6% to 9% target band.
However, Nigeria’s gross dollar reserves plunged by 18% so far this year to $37.96 billion as at April 10, 2014. This is also an aftermath of the suspension of the CBN Governor, leaving it at an 18 month low.
The CBN would welcome the return of offshore investors to Nigeria’s fixed income market and it would help underline a bid for the naira.
The CBN economic report for January 2014 provided a temporary data which indicated that through CBN, foreign exchange inflow was $2.54 billion while outflow was $4.65billion. This resulted in a net outflow of $2.11 billion, compared with the net outflow of $0.69 billion in previous months.
In the previous months and the corresponding period of 2013, outflows have risen by 23.3% and 202.5% respectively. The CBN report also states that this development was credited largely to the increase in rDAS at $2.99 billion, BDCs at $0.56 at billion and interbank sales at $0.49 billion.