Naira appreciates as demand moderates

Naira on Wednesday appreciated against the dollar across foreign exchange (FX) market as demand for the greenback moderated.

In some FX trading areas across the country on Wednesday, naira steadied at N867 per dollar. In some other areas the cost of one dollar was as strong as between N850 and N860 at the parallel market.

One black market operator told BusinessDay that the demand for dollars has moderated since the beginning of this week.

At the Investors’ and Exporters’ (I&E) forex window, naira appreciated marginally by 0.07 percent as the dollar was quoted at N791.42 on Tuesday as against N792.04 on Monday, data from the FMDQ indicated.

The daily foreign exchange market turnover increased marginally by 4.22 percent to $51.55 million on Tuesday from $49.46 million recorded on Monday.

Willing buyers and sellers maintained bids as high as N845/$1, which was stronger than N855.00 bid on Monday.

Read also: Naira loses 1.79% at official FX market on dollar shortage

The market auction also recorded lower bids of N730.00, weaker than N650.00 bids maintained on Monday at the I&E window.

On the other hand, the CBN on Tuesday hinted at plans to gradually phase out the old N200, N500 and N1,000 as new naira notes are being issued.

Folashodun Shonubi, acting governor of the CBN, disclosed this while briefing journalists on the outcome of the two-day Monetary Policy Committee (MPC), held in Abuja on Tuesday.

He said the old notes would gradually be replaced over time, adding that whenever commercial banks request new currency, the old notes are exchanged for the new ones, ensuring a smooth transition.

“When a currency is printed and sent out, it is expected to go through a number of cycles and be replaced over time. That’s what we’re doing. We are slowly and over time replacing the old notes with new ones ” he said.

Speaking further, he said, “We had to put out or re-put out old notes. And as they’re coming in, they’re being processed and returned to us as not issuable. We are then bringing them out and replacing them with the new notes.”

“The replacement process will be gradual and without fanfare. “You will just see it slowly morph from old to new,” Shonubi said.

On October 26, 2022, Nigeria’s banking and finance sector regulator took a decision to redesign N200, N500 and N1,000, the country’s high value currency, with the approval of former President Muhammadu Buhari.

The redesigned naira was rolled out in December 15, 2022 and resulted in cash crunch across the country, following the controversial deadline for phasing out the old naira, which expired first on January 31, but was extended, by the CBN to February 10, 2023 and subsequently the Supreme Court’s intervention, which put the final deadline to December 31, 2023.