Naira Makes Biggest Gain in Months in Official Window, Trades Stronger in Black Market
- The naira has recovered below the N1,300 mark against the US dollar in the official forex market
- The naira traded at N1,278.58 per dollar in the official market on Tuesday, April 2, 2024, from the N1,309 traded on the last trading day in March
- The naira made its most significant gains in the parallel market end of the FX market, trading at N1,250 per dollar
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The official exchange rate is trading below the N1,300 per dollar mark for the first time since January 2024, when the Nigerian currency hit its lowest at N1,600 per dollar.
The naira rallied in the official Nigerian Autonomous Foreign Exchange Market (NAFEM) to trade at N1,278.58 on Tuesday, April 2, 2024, as against the N1,309 traded on Thursday, March 29, 2024, before the Easter holidays.
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CBN's policies propelling the naira
Analysts believe that a series of forex policies by the Central Bank of Nigeria (CBN) has led to a 21% recovery of the Nigerian currency since March, when the naira hit its lowest.
Data from FMDQ shows that traders quoted the naira at an intraday high of N1,312 per dollar and a low of N1,250 per dollar.
The forex market recorded a daily turnover of $111.8 million, a drop from the average daily turnover of N857 million on Thursday, March 29, 2024.
The Naira makes its most significant gains
The exchange rate disparity closed to N130 in the official market, the slimmest in days.
The naira made its most significant gains in the parallel end of the foreign exchange market, trading at N250 per dollar on Monday, April 1, 2024.
The naira recovered from N1,915 per dollar in February at the Bureau de Change segment to N1,255.
The Association of Bureaux de Change Operators of Nigeria (ABCON) has said the naira gained over N600 per dollar since they were readmitted into the FX market by the CBN.
The apex bank recently sold $10,000 to each BDC operator at N1,251 per dollar, asking them not to sell above a certain threshold.
The naira is making gains against other currencies
Analysts believe that CBN’s policies of maintaining forex liquidity are working.
Chinenye Ijeh, a forex dealer and broker, said the CBN policies have boosted the naira’s performance against major currencies.
She said Nigeria’s forex liquidity is at its buoyant best due to the policies put in place by the CBN.
“Remember that the naira is not just recovering against the US dollar but against major currencies. This shows that the policies are not cosmetics but intentional and well-thought-out.
“Also, Nigeria has experienced strong diaspora remittances, boosting inflows to about $1.5 billion in March. The reason is that the huge disparity between the official and parallel markets has closed, making FX remittance via the black market, making it unattractive to speculators,” she said.
The dollar sells cheaper in the parallel market
Legit.ng earlier reported that the naira appreciated in the parallel market on Friday, March 29, 2024, to trade at N1,280 per dollar.
The development means the Nigerian currency appreciated by 5.19% from the N1,350 per dollar traded on March 27, 2024.
Bureau de Change (BDC) operators quoted the buying rate of the dollar as N1,260 per dollar and the selling rate as N1,280, making a profit of N20.
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Source: Legit.ng
