3 Reasons To Be Optimistic As Naira Strengthens Against Dollar

On Monday, the Naira continued its positive trajectory against the dollar in the official market, marking the third consecutive gain in the new year,leadership reports.

According to data from NAFEM, the official forex trading platform, the currency experienced a notable surge of 1.45%, closing at N856.57 per dollar. This represents a substantial N12.56 gain compared to the previous day’s closing rate of N869.13.

In the parallel forex market, where unofficial trading occurs, the Naira also witnessed appreciation, quoting an exchange rate of N1245/$1, signifying a 0.80% increase from the prior day. Peer-to-peer traders set the rate at approximately N1235.17/$1.

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Key Takeaways:

1. Naira’s Upward Climb:
   • The official market saw a significant 1.45% appreciation, closing at N856.57 per dollar.
   • The parallel market reflected an 0.8% gain, bringing the exchange rate closer to N1245/$1.
   • Compared to the previous week’s closing at N869.13, the Naira has gained N12.56, indicating a positive momentum.
2. Afreximbank’s Pivotal Move:
   • The rise in the Naira is attributed to the $3.3 billion foreign exchange (FX) support facility provided by Afreximbank.
   • This strategic initiative aims to address Nigeria’s forex shortage and infuse much-needed liquidity into the NAFEM window.
   • The first tranche of $2.25 billion has already been deposited, offering immediate relief to the forex market.
3. Collaborative Effort for Economic Stability:
   • The success of the initiative highlights the collaborative efforts of key stakeholders:
     • Afreximbank as the lead arranger.
     • UBA as the local arranger and onshore depository bank.
     • NNPC as the principal financier.
     • Oil trading firms such as Sahara Energy, Vitol, Oando, and Gunvor as sub-lenders and contributors.
   • This united front underscores a strong commitment to addressing Nigeria’s economic challenges.

Looking Ahead: The recent positive developments and collaborative efforts present encouraging signs for the stability of the Naira. While challenges persist, the influx of funds and coordinated actions pave the way for more sustainable forex market conditions in the near future.