On Thursday, the Nigerian naira demonstrated a consistent upward trend against the United States dollar, strengthening by N18 to settle at 1,382/$ in the official market,Punch reports
This development coincided with a stern warning from the Presidency directed at currency speculators, cautioning them against engaging in activities detrimental to the national currency, with a clear message that such individuals would face consequences for their actions.
The naira’s appreciation followed significant gains observed across both official and parallel foreign exchange markets a day earlier, where it closed at N1,400/$ on Wednesday in the black market.
Summary data from the FX trading auction revealed a notable 1.3 percent increase in the naira’s value, attributed to heightened dollar supply in the Nigerian Autonomous Foreign Exchange Market, as reported by the FMDQ Securities Exchange Limited.
ALSO READ: Nigeria Has Become A Killing Field Under Tinubu – Atiku
Throughout Thursday’s trading session, the naira’s intraday high settled at N1,598 per dollar, marking a strengthening from the previous day’s close of N1,620. Similarly, the intraday low saw improvement, reaching N1,300/$ compared to the previous day’s N1,350/$.
The influx of dollars from FX market participants surged to $288.47 million, indicating a notable 7.46 percent increase from the $268.29 million recorded the previous day, as reported by the Nigerian Autonomous Foreign Exchange Market.
In recent weeks, the naira has witnessed a remarkable gain of N500 against the dollar in the unofficial market, attributed to the Central Bank of Nigeria’s efforts to bolster confidence in the FX market.
On Wednesday, the CBN announced the successful resolution of all valid foreign exchange backlogs, fulfilling Governor Olayemi Cardoso’s commitment to addressing outstanding claims amounting to $7 billion. Acting director of corporate communications at the CBN, Hakama Sidi Ali, conveyed this accomplishment, stating that the CBN had disbursed $1.5 billion to settle obligations to bank customers, effectively clearing the remaining FX backlog.
Cardoso reiterated the importance of clearing the FX backlog to enhance the credibility and confidence in the Nigerian economy.
The pressure on the naira/dollar exchange rate appears to be gradually easing, as evidenced by Nigeria’s sustained growth in external reserves over the past month. According to CBN data, foreign currency reserves increased by 3.62 percent to $34.37 billion as of March 12, 2024, compared to $33.17 billion recorded at the beginning of February 2024.
Additionally, the CBN reported a substantial surge in Diaspora remittances, which surged by 433 percent to $1.3 billion in February, up from $300 million in January.
Meanwhile, the Special Adviser on Information and Strategy, Bayo Onanuga, advised currency traders speculating on foreign exchange to divest their dollar holdings promptly, anticipating further appreciation of the naira.
He warned speculators of potential losses, urging them to act swiftly to avoid adverse consequences.
In summary, recent measures by the Central Bank of Nigeria and enforcement actions against illegal BDC operators have contributed to reducing naira volatility and encouraging speculators to exit their dollar positions, leading to the naira’s recent gains.
