The nation’s currency, Naira began the new month on a bullish note, appreciating to N1,278.58 against the United States dollar from N1,309.39 per dollar recorded last week Thursday.
This indicates an increase of N30.81 at the close of trading activity.
According to data from FMDQ Securities, the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market (AFEM), closing below the N1,300 ceiling marks the first instance since January 26 of this year.
Recall that the Naira depreciated to as low as N1,615/$1 on March 13, 2024.
Since the introduction of a slew of forex policies by the central bank, the naira has gained over 21 per cent on the dollar since March.
Liquidity in the forex market has been attributed to an array of policies currently implemented by the Central Bank of Nigeria, (CBN).
In the last two weeks, the CBN and other banking institutions improved dollar supply to the foreign exchange market by $2.5bn. Similarly, forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market reduced by 106% to $111.18m on Tuesday, from $857m at the close of trading activity last week Thursday.
The foreign exchange trading resumed on Tuesday after the Easter holiday, with the Naira appreciating at the parallel market to N1,220. Bureau De Change (BDC) operators bought at N1,220 per dollar, and sold either through cash or transfer to customers at N1,265/$ with a profit margin of N30. This represents 1.99% appreciation over N1,280 closed last week.
The Naira strengthened in both the official and parallel market segments following the CBNs move to clear all verified FX backlogs (final tranche of $1.5bn). The currency, which appreciated by 21.8% month-on-month in March 2024 is expected to maintain the trend in April, following the policy measures of the CBN.
Currency traders, while speaking to newsmen, attributed the currency’s appreciation to waned demand for the greenback note, as well as the decision of the apex bank to sell foreign exchange to operators.
A BDC operator at Wuse Zone-4, Ibrahim Yahu, stated, The demand for dollars has really gone down and the naira is appreciating because of the new rate determined by the CBN for traders.
The President of the Association of Bureaux de Change Operators of Nigeria, Aminu Gwadabe, recently noted that apart from the tightening of monetary policy resulting in interest rate hikes, increased investment in government instruments, and the clearance of $7 billion forex backlog forward commitments, the reactivation of the BDCs has notably enhanced dollar liquidity in the retail segment of the forex market.
Analyst at Afrinvest also predicted that the Naira would trade within similar band in the month of April as the CBN continues its activities to mop up liquidity and attract more capital.
