Naira Records Massive Gains against Dollar in Official Market as Traders Quote New Rates
- The Nigerian currency, the naira, bounced back against the dollar after two days of losses in the official market
- The trade recovered to N1,564.48 per dollar on Thursday, August 15, 2024, as against the N1,586 quoted the previous day
- Experts believe that the naira will appreciate further following a series of interventions by the CBN
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency, the naira, made a massive comeback against the US dollar in the official market on Thursday, August 15, 2024.
The Nigerian currency, the naira, traded at N1,564.48 per dollar on Wednesday, August 14, 2024, compared to its previous trading rate of N1,586.
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Naira reverses gains
The naira’s gain in the official market comes following two days of sustained losses after the Central Bank of Nigeria (CBN) intervened via the sales of FX using the Retail Dutch Auction System (rDAS).
The apex bank sold FX to 26 authorised dealer banks on Wednesday, August 7, 2024, and another round of sales on Friday, August 9, 2024.
CBN said it is using the rDAS to reduce the demand for FX, which it believes is hurting the local currency.
Experts believe the action led to the naira's continuous gains for last week, which saw it reverse losses.
Experts predict better days for the naira
According to data from the FMDX Exchange, willing buyers quoted the spot rate at a high of N1,600 per dollar and a low of N1,515.
The foreign exchange turnover improved to $149.25 million from the $92.39 million recorded on Wednesday, August 14, 2024.
Janet Ogochuchukwu, an economist and senior banker, believes the naira will appreciate to about N1,500 before November this year.
She disclosed that CBN's FX sales went a long way in propping up the naira’s value in the Forex market, stating that if the CBN sustains its interventions, it will ease the pressure on the naira.
“The CBN intervention reflected on inflation figures released by the National Bureau of Statistics (NBS) for July.
“What we see is that importers are accessing FX with relative ease and at affordable costs, thanks to CBN’s policies, translating to a drop in headline inflation.”
The naira’s rally came amid a drop in Nigeria’s headline inflation for July 2024.
Data from the National Bureau of Statistics (NBS) shows that the headline inflation for July 2024 eased to 33.40% compared to the 34.19% recorded in June 2024.
The July inflation showed a decline of 0.8% points compared to the June figure.
The inflation rate for July was lower than June
The annual inflation rate stood at 9.32%, higher than the rate recorded in June, at 24.08%. This shows that the inflation rate rose in July compared to the same month in the previous year.
Also, the inflation rate in July 2024 was 2.28% lower than the one recorded in June 2024, which was 2.31%.
This development means that the rate of increase in the average price level was lower in July than in June 2024.
All items inflation in July
According to the statistics body, all-item inflation was highest in Bauchi at 46.04%, Jigawa at 40.77%, and Kebbi at 37.47%, while Benue recorded 27.28% of all-item inflation.
Africa’s top 10 weakest currencies in 2024
Legit.ng earlier reported that exchange rate fluctuations, obstacles in local commerce, and weak investment are some challenges African countries face.
The development is due to currencies that perform below their intended value.
A weak currency can go beyond its direct economic consequences to undermine national pride and impact livelihoods.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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