There are strong indications that the Central Bank of Nigeria, CBN, may re-open the Retail Dutch Auction System , RDAS official window it shut in February 2014.
This is coming just as the naira in the past few weeks has remained depressed against the dollar.
Chief Economist, Africa Global Research at Standard Chartered Bank, Razia Khan, hinted last weekend, that CBN was under pressure to re-open the two-way interbank forex trading.
In a report titled “When perception is not reality,” the analyst explained that given the current perceived market shortage of dollar, a re-opening of the market is likely to see dollar-naira trade higher.
She said the ‘negative watch’ period for the continued inclusion of Nigerian bonds in the widely tracked GBI-EM index was extended in June, to allow the new government the time to formulate policy.
“Unless interbank determination of the forex rate is reintroduced, with a resulting improvement in forex liquidity, Nigeria risks being excluded from the GBI-EM index. Failure to re-open the FX market may deter direct investment as well. Few foreign investors are ready to commit new investment to Nigeria ahead of an forex adjustment that they believe to be imminent,” Khan said.