• Sunday, February 25, 2024
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Naira strengthens on parallel market after steadying for 3 days

The naira on Thursday appreciated against the dollar, gaining 0.88 percent to N1,125/$ after steadying at N1,135 for three days on the parallel market, popularly called black market.

Data from Aboki FX, an online platform that collates real time exchange rate, showed that the naira pressure has consistently moderated after the exchange rate peaked at N1,1310 last month.

For instance, while the market closed at N1,140, on Monday at the parallel market, it appreciated on Tuesday, closing at N1,135 per dollar. Still on the parallel market, naira maintained the same rate by closing at N1,135/$ on Wednesday and Thursday.

Read also: Naira falls 9.8% in three months on single FX regime

Also, the naira has been fluctuating against the US dollar at the Nigerian Autonomous Foreign Exchange Market(NAFEM), the country’s official exchange rate window.

Naira on Thursday weakened by 2.70 percent as the dollar was quoted at N841.14 as against N818.99 on Wednesday.

It appreciated to N839.48/$ on Monday and Wednesday to N818.99/$.

NAFEM is the reference rate for spot FX operations in the autonomous FX market, which comprises recognised FX trading segments, including but not limited to the inter-bank market, the I&E FX Window, and any such approved and recognised trading segment as may be defined by the regulator.

Read also: Naira fails to gain despite 46.69% rise in dollar supply

A black market operator, Saidu Abdulrahman, who spoke with our Correspondent ,said the dollar sells for N1,050 while they buy at N1,020, showing another significant appreciation in the black market.

However, speaking on sustainability of the rise in naira value against the US dollar, the chief executive officer, Cowry Asset Management Limited, Johnson Chukwu, said the Central Bank of Nigeria (CBN), should continue to make the market liquid.

According to him, sufficient supply of foreign exchange into the market will drive up the value of the naira and crash the value of FX, especially the US dollar.

He stated further that there would be liquidity in the market when there is improvement in the country’s crude oil production.

Read also: nNaira resumes fall after gaining for two days

“Whenever the CBN improves supply into the market, naira will appreciate at FMDQ and whenever the supply is not sufficient enough to meet demand, it will depreciate. Basically, the CBN is the key leader because right now the market has no commercial viability. We don’t have a situation where the supply will be enough to meet demand in the autonomous market so the CBN intervention largely determines what happens in the market.

“Liquidity will come when we have improved crude oil production. That’s the fastest route to get liquidity sufficient enough to clear arrears.

“The only thing is to get more liquidity and that will be through the improvement in crude oil production or government access borrowing like they are planning to do now,” he stated.