New Exchange Rate As CBN New Approach Helps Crash Dollar Below N1,600/$1

• The value of the Nigerian currency has appreciated against the dollar in the official foreign exchange market
• The appreciation is the third straight gain following the CBN's adoption of a new foreign exchange approach
• The reduced demand for dollars from non-bank sources has contributed to the naira's recent gains

The Nigerian naira continued its appreciation against the US dollar in the foreign exchange market.

Data from FMDQ securities showed that at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official market, the naira closed against the dollar at N1,572.20/$1 on Friday, August 9, 2024.

Friday's rate is 1.22 per cent or N6.48, an improvement for the naira compared to the exchange rate of N1,593.62 per dollar quoted on Thursday, August 8, 2024.

The strengthening of the local currency is thanks to the CBN's change of approach to address the forex liquidity issues affecting the financial system.

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Legit.ng reported that on August 6, 2024, the CBN sold $876 million to Nigerian companies through its Retail Dutch Auction System.

Naira to euro, pounds

It was the same story for the naira against the British pound and the euro in the official market.

CBN data showed that the naira gained N15.32 against the pound sterling on the week's last trading session, settling at N2,010.76/£1 compared with Thursday's rate of N2,026.08/£1.

The Nigerian currency also appreciated against the euro by N12.60 to close at N1,726.27/€1 versus N1,738.87/€1.

Naira to dollar black market

It was good news for the naira in the black market, as BDC traders traded at N1,590/$1, compared to the previous rate of N1,605/$1.

Legit.ng spoke to Abudulahi, a BDC trader, who explained that the market demand for the dollar has decreased.

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He said:

"The dollar demand from us has reduced in the last few days, which is why the naira is appreciating. The CBN's new approach means most of our customers now go directly to banks. Our target is now Nigerians looking to travel and who need quick access to dollars."

Report predicts three sources Nigeria will get dollars

Legit.ng reported that a recent quarterly statistical bulletin from the Central Bank of Nigeria (CBN) has highlighted that foreign exchange (FX) consumers consumed more dollars in the three months ending in December 2023 than they did in the previous quarter.

The inflows will likely come from World Bank budget finance, NNPC-related flows, and Eurobond issuance.

The inflows will likely come from World Bank budget finance, NNPC-related flows, and Eurobond issuance.

Source: Legit.ng