The foreign exchange (FX) market Traded calmly on Monday as the naira maintained gains following recent policy measures introduced by the Central Bank of Nigeria (CBN).
After trading on Monday, the naira appreciated by 1.10 per cent as the dollar was quoted at N1,419.86, stronger than N1,435.53 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data obtained from the FMDQ.
The local currency gained thrice at the official market since the CBN commenced a series of FX policy adjustments last week.
On Friday, BusinessDay reported that Nigeria’s currency appreciated further as foreign exchange market recorded increased dollar supply at the official market.
Dollar liquidity remained unchanged as the daily FX market turnover stood at $440.13 million on Monday, the same as of Friday.
Intraday high steadied at N1,526 per dollar the second time, while the intraday low weakened to N906/$1 on Monday from N838.96/$1 on Friday and N891 per one dollar on Thursday.
Naira also appreciated at the parallel market, known as black market, gaining 0.14 percent as the dollar traded for N1,438 on Monday as against N1,440 on Friday.
In an exclusive interview with Arise Television on Monday, February 5, 2024, Olayemi Cardoso, the Governor of the CBN, unveiled a series of insights and policy directions aimed at tackling prevailing challenges in the country’s FX market.
Acknowledging the liquidity shortage and market volatility, Cardoso outlined the CBN’s commitment to enhancing transparency, liquidity, and market vibrancy through policy reforms. These reforms, he emphasized, embrace market liberalisation and aim to attract Foreign Portfolio Investments (FPIs) and Foreign Direct Investments (FDIs).
Notably, he clarified the CBN’s stance on domiciliary accounts, affirming no plans for conversion to Naira to maintain market integrity.
Cardoso further detailed initiatives such as directives to banks and International Money Transfer Operators (IMTOs) to maintain specified limits and operate exclusively within the formal market.
These measures, he stressed, are geared towards fostering confidence and narrowing the gap between official and unofficial FX markets.
Addressing FX backlogs totaling an estimated $7.0 billion, Cardoso disclosed the engagement of Deloitte for a forensic audit, revealing that $2.4 billion in claims do not qualify for settlement due to various discrepancies.
Moreover, Cardoso emphasized the importance of collaboration between monetary and fiscal authorities, advocating for mutual understanding and cooperation to steer the economy effectively.
Regarding recent directives for revenue remittance to the CBN, particularly from entities like the Nigerian National Petroleum Corporation (NNPC), Cardoso hailed the move as positive for enhancing investor confidence. Assessing the current state of the Naira, he attributed undervaluation to investor panic and market misunderstandings but expressed confidence in policy measures endorsed by the international community and rating agencies to stabilize the currency.
“I also think that it is good news that the market was left to find its levels before the CBN starts to supply any USD itself. No subsidising an exit,” Razia Khan, managing director, Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank, said on X, former Twitter.
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