Naira Sees Unprecedented Gains Against the Dollar

The Naira concluded the week on a high note, strengthening to N1,431 against the dollar as of Friday, 22 March 2024. This improvement marks a significant rally that has persisted for seven days, showcasing a robust recovery phase for the Nigerian currency. According to data from the FMDQOTC, the primary platform for setting the official exchange rate, the Naira appreciated by 1.52% at the close of the week, indicating a continuation of its upward trajectory.

This recent performance suggests that the aggressive policies enacted by the central bank since February are beginning to bear fruit, with the Naira securing over a 12% increase in just one week. On 22 March, the exchange rate hit a peak not seen since 5 February, when it concluded the day at N1419.86 to the dollar.

The FMDQ data revealed that throughout the day, the Naira fluctuated between a high of N1,468 and a low of N1,301 against the dollar, while the NAFEX rate was recorded at N1,381.35. The daily turnover reached $199.7 million, contributing to a total weekly turnover of $1 billion. This surge in activity indicates a significant improvement in market liquidity.

Nigeria’s foreign reserves have also seen an upturn, currently standing at $34.3 billion, with projections by the apex bank anticipating a rise to $35 billion. Despite these official figures, the parallel market continues to experience a wider range of trading rates, varying between N1400 and N1480 to the dollar, and even saw the UK Pound drop below N2000 for the first time.

The Central Bank of Nigeria’s (CBN) interventions have been crucial in this positive trend, with strategies aimed at stabilising the foreign exchange market. Market insiders attribute the Naira’s recent gains to the CBN’s significant presence in the market, speculated to have injected over $50 million. By boosting dollar supply, the bank has tackled the demand-supply imbalance, curbing speculative activities and thereby stabilising the exchange rate. These actions reflect the bank’s commitment to ensuring the Naira’s stability and hint at a strategic approach to managing the nation’s currency value.

Nairametrics