The Naira, Nigeria’s currency, appreciated to N1,382.95 per dollar following rising liquidity at the official foreign exchange (FX) market on Tuesday.
The Naira has continued to appreciate against the US currency across foreign exchange markets, thanks to the recent reforms of the Central Bank of Nigeria (CBN).
After trading on Tuesday, the Naira gained 1.81 percent (N25.09) as the dollar was quoted at N1,382.95, stronger than N1,408.04 quoted on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ Securities Limited, indicated.
The intraday high closed weak at N1,486 on Tuesday compared to N1,442 closed on Monday. The intraday low closed steady at N1,300 on the same day.
Dollar supply by FX market players including banks increased by 10.72 percent to $245.58 million on Tuesday from $221.80 million recorded on Monday.
The pressure on the foreign exchange market has eased as Naira on Tuesday appreciated to N1,340 per dollar on the parallel market stronger than N1,382.95 on the official market, resulting in an exchange rate gap of N42.95.
This represents an 8.21 percent gain against the dollar, compared to N1,450/$1 closed on Monday at the unofficial market. When compared to the level on February 20, 2024, naira has gained 36.19 percent of its value against the dollar from the lowest of N1,825/$ on the parallel market, popularly called black market.
During the two-day Monetary Policy Committee (MPC) meeting, which ended on Tuesday, the committee was encouraged by the steady appreciation of the Naira in the FX market in the past week, which it attributed to the recent FX reforms and improved transparency.
Olayemi Cardoso, governor of the CBN, who announced the outcome of the meeting on Tuesday, said the members commended the Bank on clearing the outstanding verified FX backlogs, which is expected to improve investors’ confidence and support foreign investments into the economy.
Determined to rein in inflation and stabilise the economy, Nigeria’s Central Bank on Tuesday raised the key interest rate by 200 basis points to 24.75 percent from 22.75 percent in February 2024.
In one month, the CBN has jerked its benchmark interest rate, also known as the Monetary Policy Rate (MPR) by 600 basis points to 24.75 percent in March 2024. Last month, the apex bank increased the interest rate by 400 basis points to 22.75 percent.
