Naira to Dollar Rate Finally Closes Gap in All Markets after Tinubu Opened Border
- The naira to dollar reached convergence across all markets yesterday, with both closing at N1,615 to a dollar
- Official data showed that the official market closed at N1,615.94/dollar while the unofficial market closed at N1,615.93/dollar
- This came after President Tinubu ordered the reopening of Nigeria's land and air borders with the Republic of Niger
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Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The official and parallel markets' foreign currency (FX) gap was recorded at zero (N0.01), with the dollar's quote on Wednesday being N1,615 across markets.
According to data, the dollar was quoted at N1,615.94 on the FMDQ Securities Exchange, while it was quoted at N1,615.93 on the parallel market, also known as the black market.
Source: UGC
The dollar was quoted at N1,615.94 on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), down from N1,603.38 on Tuesday, causing the naira to lose 0.78 per cent of its value.
Wednesday's intraday high finished at N1,635, slightly higher than Tuesday's close of N1,637, while Tuesday's intraday low dropped to N1,500 compared to Tuesday's close of N1,425.35 per dollar.
The Central Bank of Nigeria (CBN), banks, investors, exporters, and other FX market participants raised their dollar supply considerably, but it was insufficient to support the value of the naira.
As a result, on Wednesday, the daily FX market turnover increased by 103.59% to $248.75 million from Tuesday's $122.18 million.
This came after Legit.ng reported that President Bola Tinubu ordered the reopening of Nigeria's land and air borders with the Republic of Niger and lifted other sanctions against the country with immediate effect.
The president's action was in line with the conclusion reached at the last meeting of the authority of heads of state and government of the Economic Community of West African State (ECOWAS) meeting in Abuja on February 24.
At the extraordinary summit of the regional bloc, ECOWAS agreed that economic sanctions on the Republic of Niger, Mali, Burkina Faso, and Guinea should be suspended.
Charles Abuede, a financial analyst, explained that when the exchange rate achieves convergence at the current rate, it means that the rates of two currencies have come closer together, potentially stabilising after a period of fluctuation and since the harmonisation exercise by the CBN in June last year.
Commenting on whether the momentum would be sustained for long, he said this depends on various factors such as economic conditions, monetary policies, geopolitical events, and market sentiment.
He added:
"It's difficult to predict with certainty, as currency markets can be influenced by a wide range of factors including increased fx supply into the market as well as crude oil production and exports."
Immigration gives new directive
Legit.ng reported that the Comptroller-General of the Nigeria Immigration Service (NIS), Kemi Nanna Nandap, issued a fresh directive following President Bola Ahmed Tinubu's order to reopen borders between Nigeria and the Niger Republic.
The Economic Community of West African States (ECOWAS) had imposed several sanctions on Niger following the July 26, 2023, military coup, which toppled President Mohamed Bazoum.
Nandap has directed all controllers stationed at state and border commands along the Nigeria-Niger Republic border to comply with the directive from President Tinubu.
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Source: Legit.ng
