On Thursday, the Nigerian naira saw a steady rise in its value against the US dollar, appreciating by N18 to settle at N1,382/$ in the official exchange market.
The Presidential office issued a stark warning to those engaging in speculative activities against the national currency, stating, “racketeers would have their fingers burnt.”
This boost in the naira’s value occurred following significant gains in both the official and parallel exchange markets the day prior, where it reached N1,400 per dollar in the informal market on Wednesday.
Data from the FMDQ Securities Exchange Limited highlighted a 1.3 percent appreciation of the naira, fueled by a surge in dollar liquidity at the Nigerian Autonomous Foreign Exchange Market.
Thursday saw the day’s trading peak at N1,598 per dollar, a noticeable improvement from Wednesday’s close of N1,620. Similarly, the lowest exchange rate of the day strengthened to N1,300/$, improving from N1,350/$1 the day before.
Dollar contributions from foreign exchange market participants increased to $288.47 million, up $2 or 7.46 percent from the previous session’s $268.29 million, according to figures from NAFEM.
Over recent weeks, the naira has recuperated by N500 against the dollar from this year’s lowest point at the unofficial market, buoyed by the Central Bank of Nigeria’s (CBN) efforts to stabilize the FX market.
On Wednesday, the CBN announced it had addressed all outstanding foreign exchange demands, a commitment made by Governor Olayemi Cardoso to clear backlogs totaling $7 billion.
CBN’s interim director of corporate communications, Hakama Sidi Ali, shared this update in an email statement, revealing the completion of $1.5 billion in payments to satisfy bank customers’ demands, thus eradicating the FX backlog remainder.
Cardoso stressed the importance of clearing these backlogs to bolster the Nigerian economy’s credibility and trust.
The exchange rate pressures between the naira and dollar are easing, with Nigeria’s foreign reserves experiencing a continuous increase over the last month.
The CBN’s records show a 3.62 percent growth in foreign reserves, reaching $34.37 billion as of March 12, 2024, up from $33.17 billion at the start of February.
Furthermore, there was a remarkable 433 percent jump in Diaspora remittances to $1.3 billion in February, a significant rise from January’s $300 million.
Bayo Onanuga, the Special Adviser on Information and Strategy, has advised forex traders betting against the naira to liquidate their dollar assets, predicting an imminent rise in the naira’s value.
He urged speculators to act swiftly to avoid financial losses, stating, “With backlog FX settled, Naira is set to appreciate further, faster. Currency speculators should quickly dump their stock of dollars to avoid sorrows and tears.”
On Wednesday, the parallel market saw the naira trading at 1,410/dollar, while it reached N1,492 at the official Nigerian Autonomous Foreign Exchange Market, as per FMDQ Securities Exchange data.
The appreciation in the official market was marked by a N68 or 4.5 percent increase from Tuesday’s N1,560/$1 at NAFEM, and a 13.5 percent or N190 uplift at the parallel market.
As speculators start offloading their dollar reserves amid declining demand and CBN’s intensified crackdowns, the naira has been on an upward trajectory.
The Central Bank of Nigeria’s recent policies have been instrumental in sealing off avenues previously exploited by speculators and racketeers.
Efforts by the Economic and Financial Crimes Commission to clamp down on unauthorized BDC operators in Lagos, Abuja, and Kano have also contributed to stabilizing the naira’s value.
