Naira on the Rise Again, Appreciates by N125/$ in Black Market

• The naira appreciated against the United States dollar in the black market, showing signs of recovery
• However, the Nigerian currency experienced a slight decline in the official market after the gain of the previous day
• On the flip side, the foreign exchange market saw a significant rebound, with turnover rising to $328.32 million

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the Stock Market.

The naira strengthened in the parallel market on Wednesday, May 29, 2024, rising to N1,375 per dollar from N1,500 per dollar on Tuesday, May 28.

This shows that the Nigerian currency appreciated by N125 from the previously recorded rate of Tuesday.

According to Vanguard, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira declined to N1,329 per dollar.

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New exchange rate as naira value rises against US dollar in black market, falls in official market

Naira strengthens in black market

According to FMDQ data, the indicative exchange rate for NAFEM decreased to N1,329.65 per dollar from N1,173.88 per dollar on Tuesday, reflecting a N155.77 depreciation of the naira.

This marks the most significant single-day increase since January 2024, coinciding with a substantial rise in foreign exchange (FX) turnover, which soared by 81.59% to $328.32 million.

As a result, the gap between the parallel market and NAFEM rates decreased on Wednesday to N45.35 per dollar from N326.12 per dollar on Tuesday.

The naira's performance comes amid a new directive from the Central Bank of Nigeria (CBN) to Bureau de Change (BDC) operators to reapply for new operational licenses.

Forex turnover surges

In contrast, Monday's FX turnover was considerably lower at $180.8 million, representing a 67.50% drop from the last trading session of the previous week.

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BDC traders sell dollar at new exchange rate as naira stands firm in official market

On Tuesday, the foreign exchange market saw a significant rebound, with turnover rising to $328.32 million.

This substantial uptick in both value and turnover suggests revitalized activity and demand in the FX market, likely spurred by interventions and policies aimed at stabilizing the naira.

Also, Legit.ng reported that the Nigerian foreign exchange market had recorded a surge in forex supplies, which may have led to the recent strengthening of the naira.

The boost in FX turnover and the successful auctions of government securities are key components of the CBN's broader strategy to ensure price stability and foster economic growth.

CBN bans street trading of forex

In related news, Legit.ng earlier reported that the CBN had prohibited street trading of foreign currencies by BDC operators, emphasizing the necessity for better regulation of the foreign exchange market.

Blaise Ijebor, CBN's director of risk management, stated that the apex bank does not permit street trading of foreign currencies.

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Official, black market rates gap widens as traders adopt new naira to dollar exchange rate

He said the CBN prefers BDCs to operate from offices where customers can exchange their currencies in a regulated environment. He highlighted that the CBN aims to eliminate the practice of BDC operators trading under trees.

Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng