Naira Gains Massively Against Dollar, New Rate Revealed

The Nigerian naira has shown significant strength against the United States dollar as it began the new month on a positive trajectory. Trading at N1,278.58 against the dollar, it marks a noteworthy appreciation from the previous week’s N1,309.39 per dollar, depicting an increase of N30.81 at the close of trading activity....CONTINUE READING

This recent surge signifies a remarkable feat as the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closed below the N1,300 ceiling for the first time since January 26 of this year, as reported by FMDQ Securities.

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The naira’s journey to this milestone has been a journey of volatility, with it depreciating to as low as N1,615/$1 on March 13, 2024. However, since the implementation of various forex policies by the Central Bank of Nigeria (CBN), the naira has experienced a notable appreciation of over 21 per cent against the dollar since March.

The surge in liquidity within the forex market is attributed to a series of reforms initiated by the CBN. These reforms encompass the unification of exchange rate windows, liberalisation of the FX market, clearance of FX backlog obligations for banks and airlines, among others.Forex turnover, a pivotal metric in the financial domain, has also witnessed a surge, indicating heightened activity within the market. The recent influx of $2.5 billion by the Central Bank of Nigeria and other banking institutions has bolstered dollar supply, further strengthening the naira.

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In the parallel market, the naira’s appreciation is palpable, with rates hitting N1,220 per dollar. Bureau De Change operators have reported buying at N1,220 per dollar and selling to customers at N1,265/$, marking a profit margin of N30. This appreciation, which represents a 1.99 per cent increase over the previous week’s rate, underscores the growing confidence in the Nigerian currency.

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Currency traders attribute this surge in the naira’s value to reduced demand for the dollar and the CBN’s strategic intervention in selling foreign exchange to operators at competitive rates. The positive outlook for the naira is further reinforced by the clearance of $7 billion forex backlog forward commitments and the reactivation of BDCs, which have enhanced dollar liquidity in the retail segment of the forex market.