Access, Others Sell Dollars at Cheaper Rate as Naira Gains in Official Market, Falls in Black Market
- The naira has bounced back against the dollar after depreciating to N1,592 on Tuesday, August 20, 2024
- Wednesday, August 21, 2024, the naira appreciated by N49, trading at N1,564.84 per dollar
- However, the naira crashed in the parallel market, trading at N1,610 per dollar, leaving a gap of N67 between the official and black market rate
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian naira roared back against the US dollar in mid-week trading at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The local currency, which depreciated to N1,592 per dollar on Tuesday, August 20, 2024, bounced back on Wednesday, August 21, 2024, trading at N1,543.84 per dollar, leaving a recovery margin of N49.
FX turnover rises
Currency traders in the official market quoted the dollar's spot rate at a high of N1,599 and a low of N1,500, leaving a gap of almost N100 naira.
Data from the FMDQ Exchange shows that the forex turnover in the official market rose to $171.79 million.
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Experts believe that the naira’s recovery was not a fluke, as events led to its rise.
Expert predicts better days for the naira
According to them, the recently conducted Retail Dutch Auction System (rDAS) by the Central Bank of Nigeria (CBN) affected market sentiment and matrix.
Janet Ogochukwu, a senior economics banker, voiced optimism, saying that positive trends are propelling the naira’s recovery.
“When we look at a series of events in recent times, we can see why the naira recovered that much against the dollar.
“Remember the CBN announced the highest diaspora remittances in July to about $553 million. The market responded to that news because that much liquidity can positively affect any market,” she said.
The naira depreciates in parallel market
Meanwhile, the naira crashed in the parallel segment of the forex market at N1,610 per dollar.
According to a BussinessDay report, the naira’s crash is due to dollar scarcity in the black market.
With the crash in the parallel market, there is now an N67 gap between the official and parallel rates.
CBN reports an all-time remittance inflow
Recall that the CBN reported an all-time high remittance forex inflows of $553 million for July 2024.
The CBN said that the substantial growth of remittance receipts is due to policy measures it introduced to boost liquidity in Nigeria’s FX market.
It said the measures include licensing new International Money Transfer Operators (IMTOs), implementing a willing buyer model and allowing timely access to naira liquidity for IMTOs.
Diaspora remittances are a crucial source of FX for Nigeria, supplementing foreign direct investment and portfolio investments.
The CBN's initiatives have supported continued growth in these inflows, aligning with the institution's objective of doubling formal remittance receipts within a year, CBN said.
Naira bounces back against US dollar
Legit.ng earlier reported that The Nigerian currency, the naira, appreciated against the US dollar in the official market after the Central Bank of Nigeria (CBN) updated its FX trading reports.
According to the apex bank, the naira depreciated against the British pound but improved against the dollar and the euro in the official foreign exchange market.
In an updated exchange rate on its website, the CBN said the naira exchange rate against the pound fell marginally to N2,035/£1 after trading on Friday, August 16, 2024.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
