The Nigerian naira experienced an appreciation against the U.S. dollar on Wednesday, buoyed by an increase in dollar liquidity in the official foreign exchange (FX) market, gaining N116.84 to close the day on a positive note.
At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira appreciated by 7.59 per cent. The dollar was quoted at N1,539.65 on Wednesday, up from N1,656.49 the previous day, according to data from FMDQ Securities Exchange Limited.
The rise in the naira’s value was supported by a notable increase in dollar supply. The volume of dollars traded surged by 38.94 per cent, reaching $139.48 million on Wednesday, up from $100.39 million on Tuesday.
The FX market summary from FMDQ also highlighted fluctuations within the day. The intraday high for the dollar closed at N1,670, slightly lower than Tuesday’s N1,665. Conversely, the intraday low saw the dollar trading at N1,530, up from N1,565 the previous day.
At the parallel market, popularly called the black market, the Naira steadied at N1,660 per dollar.
The naira’s appreciation has several implications for the Nigerian economy. A stronger naira typically reduces the cost of importing goods, potentially lowering prices for imported products and providing some relief to consumers and businesses that rely on foreign goods. It can also help mitigate inflationary pressures driven by the cost of imports. Additionally, increased dollar liquidity and a stronger naira may signal a more stable and predictable FX market, boosting investor confidence and possibly encouraging foreign investments.
However, this appreciation might have drawbacks for Nigerian exporters, who could face reduced competitiveness in international markets as their products become more expensive for foreign buyers. Overall, while the naira’s appreciation and increased dollar liquidity reflect positive short-term developments, they warrant careful monitoring of their longer-term economic effects, a financial market analyst said.
