The naira’s recent surge against the US dollar came to a halt as it closed at N1,223/$ in the unofficial market on Monday. This pause follows a period of consistent gains by the Nigerian currency.
In the black market, the US dollar was priced at N1,207 on Sunday, marking a notable 15 percent decrease from its recent peak of N1,050/$ observed just a week ago.
Meanwhile, at the official market, the naira closed at N1,234.49/$, compared to its previous rate of N1,169.99/$ on Friday.
The recent strengthening of the naira was attributed to strategic interventions by the Central Bank of Nigeria (CBN), including the clearance of a US$4.6 billion backlog of foreign exchange claims, the implementation of a willing-buyer, willing-seller model in the FX market, and the removal of the allowable limit on exchange rates quoted by international money transfer operators (IMTOs). Additionally, the CBN’s efforts to enhance FX liquidity contributed to the currency’s appreciation.
In March, the CBN initiated weekly dollar sales of US$10,000 to registered Bureau De Change (BDCs) at a rate of N1,251/USD. BDCs were instructed to sell to eligible customers at a maximum rate of 1.5 percent above the purchase price. This initiative resulted in a significant over 34 percent appreciation of the naira against the dollar on the official market, according to data from the Financial Market Dealers Quotations (FMDQ).
Despite these positive developments, concerns remain regarding the impact on the gross official reserves. CBN data as of April 16 indicated that the gross official reserves balance stood at US$32.2 billion, reflecting a 6.4 percent month-on-month and 2.4 percent year-to-date decrease from previous figures.
As stakeholders continue to monitor market dynamics, attention remains focused on maintaining stability in Nigeria’s foreign exchange market amidst evolving conditions
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
23rd April, 2024
