The Naira Commenced Trading at N1,238.3 per Dollar

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Following the Easter holiday hiatus, the foreign exchange market sprang back into action with notable developments. The Naira commenced trading at N1,238.3 per dollar at Bureau De Change (BDC) outlets. This marked a positive turn as BDC operators engaged in purchases at N1,220 per dollar, while transactions to customers were conducted at N1,265 per dollar. Additionally, the Naira witnessed a commendable surge to 1,225 per dollar on the parallel market, commonly referred to as the black market, showcasing a significant uptick from its previous close of N1,280 per dollar the previous week.

This robust performance underscored a noteworthy 1.99 percent appreciation, signaling renewed investor confidence and market stability. This positive trajectory was largely attributed to the Central Bank of Nigeria’s (CBN) concerted efforts in addressing verified FX backlogs, culminating in the final tranche release of $1.5 billion. As a result, the Naira experienced a commendable strengthening across both official and parallel market segments.

Naira’s March Surge Sets Stage for April Optimism: Buoyant Currency Poised for Continued Growth as The Naira Commenced Trading at N1,238.3 per Dollar

March 2024 witnessed an impressive 21.8 percent month-on-month appreciation in the Naira’s value, as highlighted in a report by Afrinvest Securities Limited. This upward momentum extended to the parallel market, where the Naira recorded a robust 19.6 percent month-on-month gain against the USD, reaching a closing rate of N1,300.00 per dollar. Furthermore, the daily average turnover in the Nigerian Autonomous Foreign Exchange Market (NAFEM) segment saw an encouraging 8.7 percent month-on-month increase, settling at $857.8 million as of March 28, 2024.

Looking ahead to April, market forecasts indicate a continuation of the prevailing positive trend, with the Naira expected to maintain its trading momentum. This projection is supported by the Central Bank’s ongoing efforts to regulate liquidity and attract capital inflows through increased Open Market Operations (OMO) sales. Notably, the recent decision to raise the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent is anticipated to further bolster the Naira’s performance.

Aminu Gwadabe, President of the Association of Bureaux de Change Operators of Nigeria (ABCON), emphasized additional factors contributing to the Naira’s buoyancy. These include the impact of monetary policy tightening, resulting in an interest rate hike and heightened investment in government instruments. Furthermore, the concerted efforts to clear $7 billion worth of forex backlog forward commitments have significantly augmented dollar liquidity within the retail forex market, further bolstering the Naira’s resilience and stability.