Naira on Friday strengthened further against the dollar as demand moderated on the black market segment of the foreign exchange (FX) market.
After trading on Friday one dollar was sold for N1,110 as against N1,120 sold for on the previous day, representing a gain of 0.89 percent.
Traders were cautious of buying dollars at higher rate because of the news that the government is trying to increase dollar supply in the market.
Nigeria’s government is expecting an inflow of $10 billion to help raise dollar supply and to digitalise FX transactions and discourage speculative demands and hoarding of FX in cash.
Aminu Gwadabe, National President of Association of Bureau De Change Operators of Nigeria (ABCON), said what is happening in the market and the continued naira rebounds is the manifestation of the Central Bank of Nigeria (CBN) double-edged sword measures of dollar liquidity injection and naira mopping through the instrumentality of interest rates hikes.
“It is a good development as it is a great risk to speculate, hoard, and substitute naira for other currencies,” he said, adding that the speculators are usually interested in the elements of sustainability of the feat so far achieved, it is panic selling as against panic buying.
“It is therefore necessary for the management of apex bank to continue to make clarifications and implement some of our recommendations to include the BDCs in the foreign exchange market to enable their roles in meeting the needs of the critical retail end sector as they pose a highly pass-through effects of the Central Bank foreign exchange rate policy of stability and elimination of disparities in the overall market,” he said.
At the Nigerian Autonomous Foreign Exchange Market (NAFEM), naira fell to an all-time low of N996.75 per dollar on Thursday despite increased dollar liquidity.
This shows 13.95 percent depreciation compared to N874.71/$1 exchanged on Wednesday and 2.93 percent weaker than N993.82/$1 quoted on October 30, 2023.
The FX market recorded significant dollar supply from willing buyers and willing sellers but this failed to shore up the value of naira due to increased demand for dollars.
Consequently, the daily FX market turnover increased by 101.32 percent to $228.54 million on Thursday from $113.52 million recorded on Wednesday.
The spot rate was as high as N1,100 per dollar on Thursday, weaker than N1,097.50/$1 on Wednesday and N744/$1 low rate, which was slightly weaker than N745.00/$1 spot rate quoted on Wednesday.