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Exchange Rate: Naira Gains Ground in the Official Parallel Market
Exchange Rate: Naira Gains Ground in the Official Parallel Market
On Friday, the naira rebounded against the US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official exchange rate window, closing at N794.89/$1. Following a two-day decline in the official market, Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), stated that deliberate measures are being taken “to ensure stability, curb speculation, and restore confidence in the foreign exchange market.”
Data available on the FMDQ Securities Exchange, a platform that oversees foreign exchange (FX) trading in Nigeria, showed a recovery of 16.88% from the N956.33 it recorded on Thursday.
Consequently, at the parallel market, the naira sustained its appreciation against the dollar as it appreciated on Friday, from N1,160 it sold on Wednesday and Thursday to N1,155, representing a marginal N5, or 0.43 percent gain when compared to Thursday’s closing level at the parallel market. At Ikeja, the capital of Lagos, the naira traded at N1,125 to the US$ at the Bureau de Change (BDC) segment of the FX market, even as Salisu.
Mohammed, an operator, noted the possibility of the naira gaining strength against the US dollar in the coming weeks. He could, however, not proffer any justification for such an expectation.
The appreciation may not be unconnected to the governor of the Central Bank of Nigeria’s (CBN), Olayemi Cardozo’s, plan to unveil the bank’s monetary policy thrust and economic outlook for 2024 at the Bankers’ Dinner.
It could not be immediately ascertained whether the gain had anything to do with a tweet Thursday by the apex bank on its official X handle (formerly Twitter) that “the Governor, Central Bank of Nigeria, Mr. Olayemi Cardoso, to unveil the Bank’s Monetary Policy Thrust and Economic Outlook for 2024.”
In a report ahead of the governor’s speech, Bloomberg noted that Cardoso’s address takes on greater significance, as it would draw a line under the chaos that’s engulfed the central bank in recent months.
Adebayo Adeleke, an investment management expert, capital market activist, boardroom strategist, and real estate developer, in a chat with the Sunday Independent, urged the CBN to concentrate efforts on core issues such as forex management and monetary policy that will bring down inflation and support growth.
Adeleke also wants attention paid to advising the Federal Government on how to improve its US dollar earnings while helping to block loopholes, in addition to exposing looters of the nation’s dollars.
A management consultant, Babatunde Adeniji, blames the Naira crisis largely on the activities of speculation, following the country’s liquidity challenge, noting that the rate is still unpalatable to the business community and Nigerians at large.
Specifically, he noted that “in terms of price, in the short term, it is speculation that drives things.
If you are a trader and you want to take a bet with the level of distrust of the government and no clear, visible assurance of where the dollar is coming from to stabilize the naira, which position would you take? You are bound to take the position skewed towards the dollar.”
He said the country would begin to heave a sigh of relief when the authorities can pay up all the backlog of foreign exchange forwards with sufficient liquidity to meet pending obligations.
“Nigeria as a country does not have enough dollars to meet its promise. If we don’t do things that are substantial and visible, all that grammar would not help.”
