Naira has Staged a Remarkable Recovery

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Nigeria’s local currency, the naira, has staged a remarkable recovery, showcasing a resurgence in market confidence. The naira’s upward trajectory has been evident both in the official exchange supervised by NAFEM and the parallel black market. This resurgence is largely attributed to the implementation of new policies orchestrated by the Central Bank of Nigeria (CBN).

On Friday, April 12, 2024, the naira witnessed a significant surge on the official market, soaring to a trading rate of N1,142.38 against the dollar. Data from the FMDQ Exchange’s official trading platform, overseeing the Nigerian Autonomous Foreign Exchange Market, reveals a substantial increase of N88.23. Similarly, within the black market, the naira experienced a commendable appreciation. This surge, marking a 7.16% rise compared to the preceding session on Monday, April 8, underscores the naira’s mounting comeback against the dollar.

Naira’s Revival: Surge in Value Signals Market Confidence Boost Amid CBN Policy Impact

A picture of a dark hand counting 1000 naira notes

In the Investor’s and Exporter’s window, the naira traded within the range of N1,265 and N1,100 vis-à-vis the dollar. Moreover, within the parallel FX market, the naira appreciated to N1,150 per dollar. Bureau de Change (BDC) operators in Lagos established a buying rate of N1,110 and a selling rate of N1,150, maintaining a profit margin of N40. Alhaji Danladi Musa, one of the operators, highlighted the impact of CBN policies, noting a significant decrease in the exchange rate due to the bank’s resumption of dollar sales.

The total daily turnover surged to $281.34 million on Friday, a substantial increase from the $125.55 million recorded on Monday. The recent surge in the naira’s value closely follows the CBN’s third phase of dollar sales to BDC operators, coupled with a directive to banks to cease accepting foreign currency-denominated collaterals for naira loans. These actions underscore the CBN’s commitment to bolstering liquidity and fortifying the naira’s position in the financial realm.

In addition, Goldman Sachs has suggested that the naira could surpass expectations, emerging as the top-performing currency globally in April. Economists at the firm emphasized the effective policy management by the CBN, projecting further gains for the local currency in the foreseeable future.