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Naira Hits 1,262/$ as Dollar Supply Remains Stable

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The upward trend of the naira against the US dollar persisted on Wednesday, with appreciations seen in both the official foreign exchange and parallel markets, bringing relief to many Nigerians.

Data from the FMDQ Securities Exchange showed that the naira strengthened by N16 or 1.26% at the Nigerian Autonomous Foreign Exchange Market, reaching N1,262.85/$ on Wednesday compared to the N1,278.58 rate on Tuesday.

The local currency’s positive momentum against the dollar continues, with expectations of further growth, partly due to the various foreign exchange policies implemented by the Central Bank of Nigeria to boost dollar supply and ensure transparency in the FX market.

One significant move was the CBN’s decision on June 14, 2023, to eliminate market segmentation, consolidating all into the Investors & Exporters window (now known as the Nigerian Autonomous Foreign Exchange) and reintroducing the Willing Buyer, Willing Seller framework, among other reforms.

In January 2024, the CBN instructed International Money Transfer Operators to use prevailing market rates for naira payouts to beneficiaries.

In February 2024, the CBN removed caps on interbank Forex transaction spreads and restrictions on the sale of interbank proceeds. The apex bank also mandated that Personal and Business Travel Allowances only be disbursed through electronic channels.

By March 2024, the naira’s volatility had decreased as a result of CBN-led reforms aimed at enhancing transparency and increasing inflows into the FX market.

Currency traders interviewed by NewsNow credited the naira’s appreciation to reduced demand for the dollar and the CBN’s decision to provide foreign exchange to operators. According to Ibrahim Yahu, a BDC operator at Wuse Zone 4, “The demand for dollars has significantly decreased, leading to naira appreciation due to the CBN’s new exchange rate for traders, which has facilitated trading activities.”

Similarly, the intraday high on Wednesday was N1,296.00, an improvement from Tuesday’s N1,312/$1, while the intraday low settled at 1,210.00 compared to N1,250/$1 previously.

This signifies the narrowest exchange rate margin observed between the intraday high, intraday low, and the closing rate, all falling below N130.

The daily turnover surged to $116m from $111.8 million.

Meanwhile, at the parallel market, the naira strengthened to N1,250 against the dollar, marking a 0.8% gain (N10) from Tuesday’s N1,260 closing rate on the parallel market, commonly known as the black market.

Compared to the level on February 20, 2024, the naira has appreciated by 46% against the dollar from its lowest point of N1,825/$ in the parallel market.

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