L-R: Head, Credit Risk Management, Access Bank Plc, Mr. Joe Osojie, Currency Analyst Consultant, ForexTime Trading, West Africa, Mr. Bade-Ajidahun Oludahun and Finance Editor, Vanguard Newspapers, Babajide Komolafe during FICAN Roundtable on the Economy with the theme, The Economy in H1 2012 and outlook for H2 2012 held at Sheraton Hotels in Lagos on Wednesday, August 8, 2012.
WorldStage Newsonline-- Currency Analyst Consultant, ForexTime Trading, West Africa, Mr. Bade-Ajidahun Oludahun has described the trend in the Nigerian foreign exchange market as quite disappointing, a development he blamed on the poor economic performance, insecurity issues, and poorly implemented economic policy
Delivering a paper ‘Half year Performance of The Foreign Exchange market in 2012 ‘Global Economy in H1 2012 and Impact on the Nigerian Economy’ in Lagos at the FICAN roundtable on the economy with the theme The Economy in the First Half of 2012 and Outlook for Second Half of 2012, Oludahun said, the development had driven the exchange rate in the parallel market to over 164 to a dollar.
“All though we have some promising reforms going on in the country, but the effect may be seen much more later, probably 2013/2014,” he said.
He defined the foreign exchange market (forex) as the largest financial market in the globe accounting for over 4.1 trillion dollars daily turnover, while the performance of an economy is reflected in the exchange rate of that economy compared to another economy.
HALF YEAR PERFORMANCE
The Central bank of Nigeria (CBN) offered a total of US$29,480mn through the Wholesale Dutch Auction System (WDAS) in 2011. The offer represents an increase of 15.97% over the US$25,420mn offered in 2010. The amount sold at US$29,659mn in 2011 was 19.32% higher than the amount sold in 2010. Total sale in the period was 80.07% of the amount demanded at US$37,040mn
A further analysis of the exchange rate in 2011, showed that the average exchange rate recorded in the official market was N152.29/US$1, up from N148.68US$1 in 2010. The minimum and maximum exchange rates recorded in 2011 and 2010 were N149.50/US$1 and N157.26/US$1, from N147.06/US$1 and N150.05/US$1, respectively.
At the inter-bank market, the average exchange rate in 2011 was N155.94/US$1, up from N151.20/US$1 in the corresponding period of 2010. The minimum and maximum exchange rates recorded in 2011 and 2010 were N151.20/$1 and N167.80/US$1 from N149.00/US$1 and N155.30/US$1, respectively.
At the parallel market, the average exchange rate in 2011 was N158.95/US$1, up from N152.44/US$1 in 2010. The minimum and maximum exchange rates recorded in 2011 and 2010 were N153.00/US$1 and N166.00/US$1 from N150.60/US$1 and N156.70/$1 respectively.
The value of the Nigerian Naira depreciated in all the three segments of the foreign exchange market against the US Dollar in 2011. The official, inter-bank and parallel markets depreciated by 5.05%, 5.49% and 6.93% respectively, compared with the depreciation of 0.72%, 1.74% and 2.19% recorded in the official, parallel and inter-bank markets respectively in 2010. Towards the end of 2011 the CBN exceeded the 3% limit it placed on the movement in the Naira in the foreign exchange market
He noted that excessive demand pressure at the foreign exchange market remained largely unabated for most part of 2011 even in to 2012, causing the value of the Naira to slide against the US Dollars. In order to ensure stability in this market, the CBN employed some measures both conventional and unconventional.