it’s the my view that the recent floating of the Naira exchange rate via the new CBN Interbank market has been undermined by new regulations and rules by the CBN to banks, currency transfer operators and BDCs …these rules distort the ability of the market to price the US Dollar solely on a willing buyer/willing seller basis.
Supply to the market has also not improved and this has expressed itself in a widening gap between the parallel and interbank markets.
While, in theory the CBN has met currency forward claims, The fx demands from the 41 items banned from the Interbank market has been met at rates higher than the interbank market rate. Demand still outstrips supply.
The Interbank market as being currently regulated will not result in a market driven pricing mechanism.
We project a weaker naira and a weaker interbank market on the above-mentioned points.