Traders Sell Dollars at New Rates as Naira Recovers for 2nd Day amid Rise in FX Reserves

• The Nigerian naira has returned against the US dollar, appreciating by 1.93% on Monday, May 20, 2024
• Data from the NAFEM shows that the naira exchanged for N1,468.99 per dollar as against N1,497 of the previous week
• The naira’s recovery comes amid increased FX turnover in the forex market at $161.41 million

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

The Nigerian currency, the naira, recovered against the US dollar for the second day in the official market in one week.

The naira appreciated at N1,468.99 per dollar on Monday, May 20, 2024.

Naira records 1.93% gain

The new rate represents a 1.93% increase compared to the N1,497 per dollar on Friday, May 17, 2024.

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The naira recorded a 2.5% decline from N1,593 per dollar on Thursday, May 16, 202, the weakest since March this year.

Data from FMDQ Exchange show that the forex exchange market experienced a market turnover of $161.41, a 93.31% increase from the $83.5 million recorded on Friday, May 17, 2024. Analysts say this contributed to the rise in the naira’s value.

The increase in FX liquidity on the market comes after the daily turnover in the market declined between Thursday, May 16, and Friday, May 17, 2024.

According to reports, since January this year, the foreign exchange turnover experienced the lowest on Friday, May 17, 2024, at $83.51 million.

Analysts blame naira's fall on liquidity squeeze

Forex traders quoted the dollar at an intraday high of N1,550 and a low of N1,400 per dollar.

Analysts say the naira is being hammered by a lack of FX liquidity, which has continued to pressure the local currency.

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They pointed out that the Central Bank of Nigeria (CBN) had not sold FX to Bureau de Change (BDC) operators in the last three weeks, making it challenging for the local currency to rise to par.

A previous report by Legit.ng shows that the naira was declining against other currencies, including the pound sterling and the euro.

Nigeria’s foreign reserves rise

Legit.ng earlier reported that Nigeria's foreign exchange (forex) reserves increased by $195.01 million to $32.64 billion at the weekend, indicating that the market is expected to have more liquidity.

The recent accretion marked the fourth consecutive increase in foreign exchange reserves after a month of declines.

The reserves increased by $89.76 million the week before. Before this, it had increased by $10.76 million and $132.68 million.

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng