By Babajide Komolafe
Lagos — The interbank exchange rate, yesterday, rose to N159.3 per dollar in response to the devaluation of the naira by the Central Bank of Nigeria, CBN, on Monday

The apex bank at the end of its Monetary Policy Committee (MPC) meeting devalued the naira by moving the mid-point of the official exchange rate to N155 per dollar from N150 per dollar, while maintain three per cent limit below and above it.

Vanguard investigation revealed that the interbank exchange rate rose in response to the movement as banks raised the selling rate. Consequently, the interbank exchange rate which used to hover between N157.5 and N158 per dollar rose to N159.3 at the close of business, yesterday.

A senior foreign exchange dealer who spoke under anonymity said the interbank market had been under pressure before the devaluation but the intervention by the apex bank had kept the interbank rate at around N158. He said with a new upper limit of N160 per dollar, such intervention would only be necessary if the interbank rate rises above N160.

However, the parallel market exchange rate did not respond to the devaluation, as the exchange rate remained stable at N160 per dollar.

Harrison Owoh, Managing Director/Chief Executive H.J Trust BDC told Vanguard that the parallel market exchange rate had long adjusted upward when the CBN had indicated it would devalue the naira by moving the mid-point of the official rate.

He said more so, there is no demand pressure in the market hence there is no incentive to take advantage of the devaluation to increase exchange rate.

While announcing its decision to devalue the naira, the CBN in its MPC communiqué said, “The Committee noted the continuing demand pressures in the foreign exchange market and the slow rate of reserve accretion as indicators that liquidity conditions may still need further tightening.

“On the other hand, lending rates are already high and having

Impact on the real sector, and global headwinds may make further tightening counter-productive and pro-cyclical should oil price fall significantly.

“Also, a combination of small fiscal adjustments and moderate depreciation in the exchange rate of the naira should compensate for maintaining current interest rate stance. Finally, the Committee noted that December is usually a period of muted economic activity, and an appropriate time to pause and assess the full impact of the recent tightening decisions after a lag.”