• Thursday, April 18, 2024
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BusinessDay

Naira to continue strengthening in April

Naira jumps to 4-month high of 1,142.38/$ at official market as dollar supply doubles

The Naira which appreciated by 21.8 percent month-on-month in March 2024 is expected to maintain the trend in April, following the policy measures of the Central Bank.

A report by Afrinvest Securities Limited noted that Naira strengthened 21.8 percent m/m against the base currency

(USD) to exchange at N1,309.39/$1.00 at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window in the just concluded month.

In the parallel market segment, the Naira gained 19.6 percent m/m against the USD to close at N1,300.00/$1.00. Similarly, daily average turnover in the NAFEM segment improved by 8.7 percent m/m to settle at $857.8m (as at 28/03/2024).

Naira steadied at N1,280 on Tuesday morning at the parallel market, popularly called the black market, and at N1,255 at the Bureau De Change (BDC) segment of the foreign exchange market.

“It is too early to determine the exchange rate today. Today’s rate should be around 10am. Yesterday Monday was a holiday, there was no trading,” a BDC Operator said anonymously.

In dollar allocation to BDCs, the Operator said, “Dollar allocation was not only for BDCs but also for letters of credit. We had bad letters of credit since the regime of Godwin Emefiele, former CBN governor. He owed banks all over the world.”

“Our outlook for April suggests that the naira would trade within similar band as the CBN continues its activities to mop up liquidity and attract more capital

inflow via increased Open Market Operations (OMO) sales following its decision to raise the Monetary Policy Rate (MPR) by 200 bps to 24.75 percent,” analysts at Afrinvest said.

Aminu Gwadabe, president, Association of Bureaux de Change Operators of Nigeria (ABCON) said aside monetary policy tightening that led to interest rate hike and more investment in government instruments and clearance of $7 billion forex backlog forward commitments, the recall of the BDCs has significantly boost dollar liquidity at the retail end of the forex market.