The value of the Nigerian currency edged closer to a significant milestone against the US dollar, with indications showing a nearing of N1,000/$ at the informal exchange market. The recent performance of the naira exhibited an appreciation trend, reaching N1,136/$ in the official market and N1,050/$ in the parallel market by the close of trading on Monday.
Market observers had been foreseeing a decline of the dollar below the N1,000 mark before the week's end.
In the official foreign exchange market, data sourced from the FMDQ Exchange, overseeing the Nigerian Autonomous Foreign Exchange Market, indicated a noteworthy surge of the naira by 6.1%, or N69, from the Friday rate of N1,205/$ to N1,136/$ on Monday.
The daily turnover saw a slight decrease to $251.60 million on Monday, compared to $281.34 million on Friday. However, there were significant improvements in both the intra-day high and low. The high reached N1,227 per dollar, up from N1,265 on Friday, while the low appreciated by N100/$1, with the dollar quoted at N1,000 on Monday, stronger than the N1,100 quoted on Friday.
These favorable adjustments followed a series of directives from the Central Bank of Nigeria aimed at stabilizing the naira, including the resolution of valid foreign exchange backlogs totaling $7 billion, as announced by the CBN governor, Olayemi Cardoso.
Further data from FMDQ indicated a substantial increase in total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM), rising by 41.7% to $3.75 billion compared to $2.64 billion in February, marking the highest level since March 2019 ($6.07 billion).
To bolster liquidity in the market, the CBN recently revised the exchange rate for Bureau De Change operators to N1,101 per dollar from N1,251/$1, alongside plans to allocate $15.88 million to 1,588 eligible BDC operators.
As part of measures to curb inflation and stabilize the naira, the CBN increased its benchmark interest rate by 200 basis points to 24.75% from 22.75% in February 2024.
Analysts at Afrinvest anticipate a continued strengthening of the naira as the CBN intensifies efforts to bolster liquidity in the market.
Meanwhile, currency traders at the Wuse Zone 4 market expressed concerns about the naira rates, highlighting diminishing profitability in their business operations.
One trader mentioned purchasing dollars at rates ranging between N950 and N980 and selling between N1,010 and N1,020. Another confirmed similar rates, with some traders reporting buying as low as N900 and selling at N940 per dollar.
Goldman Sachs Group, an investment company, noted the naira's outstanding performance globally in April, projecting further gains due to effective policy management by the Central Bank of Nigeria, which included significant interest rate hikes during policy meetings in February and March.
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