Naira Bounces Back in Official, Parallel Markets After CBN’s Currency Deal With IFC
- The Nigerian currency, the naira, has risen in the official market after depreciating on Monday, October 28, 2024
- The naira traded at N1,630.65 per dollar in the official window as against the N1,670 it traded the previous day
- Also, the naira appreciated in the black market from N1,730 to N1,725 per dollar on Tuesday, October 29, 2024
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian foreign exchange market responded positively to the deal between the Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC) for a $1 billion currency funding for Nigerian businesses.
The deal will see the IFC fund critical sectors of the Nigerian economy, allowing businesses access to funding through the local currency.
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CBN’s currency deal strengthens the naira
The news may have buoyed the FX market on Tuesday, October 29, 2024, as the Nigerian currency appreciated by 2.41%, closing at N1,630 per dollar in the official window as against the N1,670.65 it traded the previous day.
The naira’s recovery comes after days of losses caused primarily by low FX inflows in the official market.
Data from the FMDQ Exchange shows that the currency dealers quoted the naira at a high of N1,690 and a low of N1,601 per dollar, leaving a margin of N89.
Naira gains in black market
The forex turnover in the official window increased significantly from a little over $81 million to $242.59 million.
The naira also rallied in the parallel market, popularly called the black market, from N1,730 to N1,725 per dollar.
Consequently, the gap between the official and parallel markets winded to N95 per dollar.
Experts urge CBN to fund BDCs
Experts believe it is time for the CBN to intervene again in the parallel market to close the gap with the official window.
Janet Ogochukwu, a senior banker and an economist, disclosed that the margin between the two windows is too wide at the current rate.
“The CBN need to do another round of currency sales for Bureau de Change (BDC) operators, or we will discuss an N200 gap.
"I believe the government floated the currency and embarked on devaluation to close the gap, if not unify the exchange rate windows. Right now, it is not looking like the aim is being achieved,” she said.
Legit.ng earlier reported that the naira may become globally's worst-performing currency in 2024.
This development is due to the naira's continuous fall in all markets, which has lost about 79.5% in the parallel markets since last year.
Naira depreciates against US dollar
Legit.ng earlier reported that the Nigerian naira extended its free fall against the dollar in the official foreign exchange market.
According to data from the FMDQ Securities Exchange, the naira dropped in value in the Nigerian Autonomous Foreign Exchange Market (NAFEM) to exchange at N1,670.65/$1 on Monday, October 29.
Monday's exchange rate represents a 4.4% or N70.65 depreciation compared with NN1,600/$1.which was traded on Friday last week.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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