The Nigerian naira demonstrated resilience against the US dollar, marking a steady appreciation on Thursday, closing at 1,382 naira per dollar in the official market, showing an increase of N18.
This positive trend follows a warning from the Presidency directed at currency speculators, cautioning against activities detrimental to the national currency.
The uptick in the naira’s value occurred following a notable surge in both official and parallel foreign exchange markets.
The naira closed at N1,400 per dollar in the black market the previous day.
The Forex trading auction summary revealed a 1.3 percent appreciation, attributed to heightened dollar supply at the Nigerian Autonomous Foreign Exchange Market (NAFEM), as reported by data from the FMDQ Securities Exchange Limited.
The intraday high recorded on Thursday stood at N1,598 per dollar, while the intraday low strengthened to N1,300 per dollar. Market players supplied $288.47 million, marking a significant increase from the previous day’s $268.29 million at NAFEM.
In recent weeks, the naira has notably gained against the dollar, showing a remarkable improvement from its record low earlier in the year in the unofficial market, as the Central Bank of Nigeria (CBN) continues efforts to bolster confidence in the FX market.
Recall that the CBN announced on Wednesday that it had successfully addressed all valid foreign exchange backlogs, amounting to $7 billion, as pledged by Governor Olayemi Cardoso.
Hakama Sidi Ali, the CBN’s acting director of corporate communications, confirmed the finalization of a $1.5 billion payment to settle obligations to bank customers, thereby clearing the remaining balance of the FX backlog. Cardoso reiterated the importance of clearing the backlog to boost credibility and confidence in the Nigerian economy.
The strain on the naira/dollar exchange rate is gradually easing, as Nigeria’s external reserves show sustained growth. Data from the CBN indicates a 3.62 percent increase in foreign currency reserves to $34.37 billion as of March 12, 2024, compared to $33.17 billion recorded at the beginning of February 2024.
Furthermore, diaspora remittances surged by 433 percent to $1.3 billion in February, compared to $300 million in January, according to the CBN.
Meanwhile, Bayo Onanuga, the Special Adviser on Information and Strategy, advised currency traders speculating on foreign exchange to sell their dollar holdings promptly, anticipating further appreciation of the naira. Onanuga emphasised the need for speculators to act swiftly to avoid potential losses.
On Wednesday, the naira closed trading at 1,410 per dollar at the parallel market and N1,492 at NAFEM, reflecting an appreciation of N68 or 4.5 percent and N190, respectively. The recent gains in the naira’s value are attributed to speculators beginning to offload their dollar stocks amid reduced demand and CBN clampdowns.
The Central Bank’s measures, along with recent operations by the Economic and Financial Crimes Commission targeting illegal Bureau de Change operators in Lagos, Abuja, and Kano, have contributed to stabilising the naira’s volatility.
