Naira to Dollar Exchange Rate Nears N1,300/$ as CBN Clears FX Backlog
- There are indications that the naira might soon strengthen to N1300/$ after it made a solid rebound to N1,490/$
- On the peer-to-peer platform, the exchange rate was N1,200 for USDT, according to data provided by Gate.io and Kucoin
- This came after the government recently made moves to encourage more dollar circulation in the country
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Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
There are indications that the speculators have begun dumping the hard currency they had been holding, putting the foreign exchange market in a buyer's market. Hence, the naira might be headed for a N1,300 recovery.
Source: UGC
The local currency's slow recovery appears to have accelerated over the last two days, as the dollar plummeted to N1,490/$ on Wednesday, March 20.
The Guardian found that most traders are more eager to sell their holdings even though end users are holding off on making purchases because they think there is still potential for the local currency to appreciate.
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Even though N1,300/$ is within reach, several dealers told the media outlet that the dollar may reach N1,200/$ in a few days.
The official Nigerian Autonomous Foreign Exchange Market (NAFEM) currently offers a greater dollar exchange rate, while the parallel market offers naira at a discount. On Wednesday, at NAFEM, the naira closed at N1,492.61/$.
The data indicates that the official - parallel market differential will approach zero.
Recall that days after the market was liberalised last year, similar parity was achieved, but the arbitrage gradually formed, seeing it reach 50% at some point.
On the peer-to-peer platform, which the government blamed partly for the woes of the local currency, the naira traded yesterday at around N1,200 for USDT, a stablecoin pegged on the dollar at an exchange rate of one-for-one.
The international digital currency exchange Binance closed its peer-to-peer platform following a confrontation with the authorities. However, traders have adopted alternative platforms like Kucoin and Gate.io.
In a recent report, the CBN revealed that it has fulfilled the promise to pay all valid foreign exchange forwards liability.
It noted that all claims have finally been cleared, easing pressure on the foreign exchange market.
In another development, Legit.ng reported that the CBN had lifted the restrictions on forex access for importing milk and dairy products into Nigeria.
On February 11, 2020, the apex bank added milk and dairy products to the list of items not eligible for forex access.
According to reports, in a notice to customers, Zenith Bank said CBN had provided an update on eligible items for FX in a circular to commercial banks on March 12, 2024.
Zenith Bank said:
“In light of the preceding, please note that the restriction on foreign exchange for importing dairy products and its derivatives to all entities except selected companies has been lifted.”
Ban on crypto transactions lifted in Nigeria
Legit.ng also reported that the Central Bank of Nigeria lifted its restrictions on cryptocurrency transactions in commercial banks.
This is according to a circular dated December 22, 2023with reference number FPR/DIR/PUB/CIR/002/003 and signed by Haruna Mustafa, the apex bank’s Director, Financial Policy and Regulation Department.
The statement titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’ also introduced stringent customer KYC and anti-money laundering checks.
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Source: Legit.ng
