After slumping by about 30% the day before, the naira has gained 0.7% on dollar for the second day of trading without a peg, as decided by the Central Bank. This is subsequent to the Central Bank who on Monday washed out more than $4 billion to clear pent-up demand for foreign currency, according to Lagos-based trading platform FMDQ OTC Securities Exchange.

On the bonds and securities market, stock values increased and interests decreased. For now hence, President Buhari’s biggest fear which is that the naira will crumble is yet to be confirmed. Though the country’s reserve currency reached its lowest over the 10 past years, it was still $26.5 billion at June 17, 2016, of which are to be subtracted $4 billion of arrears corresponding to demand for US dollar.

Signals sent by CBN were received positively by the market. The Bank should thus remain a key player in the provision of foreign currency, US dollar mainly. However, it may not be the case on the short term as speculators and analysts project naira to devaluate by 10%, to N350 for $1, by September 2016.

Meanwhile, monetary assets managers are focused on the referendum regarding UK’s exiting the European Union. Africa’s leading economy can thus take a break, as oil prices soared to $49 and mitigated the slump in reserve currency.

CBN’s governor, Godwin Emefiele, said his institution would intervene only if balance was lost. Let’s recall that Nigeria, in order to curb currency drainage, decided to control exchange transactions by fixing a peg. At the time, oil price had slumped but goods imports kept the same trend. However the country’s decision led to higher financial costs and higher rates for international loans taken by companies, those with foreign capitals especially.

Idriss Linge