Pressure on naira slows as dollar supply improves

The persistent pressure on the naira is beginning to moderate across foreign exchange market as dollar supply improves.

Dollar was quoted at N745 during the trading session on Tuesday. Although this represents N1 or 0.13 percent loss compared to N744/$ quoted on Monday at the parallel market, traders said the rate may likely strengthen on the next trading day (today).

“There are dollars in the market now but demand is not as much as it was last month,” a trader told BusinessDay.

At the Investors and Exporters (I&E) forex window, naira gained 0.11 percent as dollar was quoted at N446.00 on Monday compared to the last close of N446.50/$ on Friday, data from the FMDQ revealed.

Most foreign exchange dealers who participated at the auction on Monday maintained bids between N439.96 and N452.00 per dollar.

Daily foreign exchange market turnover declined by 51.85 percent to $78.08 million on Monday from $162.17 million recorded on Friday.

The moderation in forex pressure comes as the new naira notes will be dispensed by banks on Thursday, as directed by the CBN.

Read also: Naira redesign: An economic or a sociopolitical solution?

“We saw the naira experience calm in demand in the foreign exchange market as Bureau De Change operators cut rates in a bid to attract users of the greenback just as we inch closer to the official date of the release of the redesigned naira notes by the CBN,” analysts at Cowry Asset Management said.

Godwin Emefiele, governor of the CBN, said the Nigerian foreign exchange market is in the middle of a serious crunch which is straining the country’s reserves and stifling the value of the naira. Market demand for both goods and invisible transactions has continued to increase under various uses in the face of dwindling supply of foreign exchange.

The official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above $3.0 billion monthly in 2014 to absolute zero dollars today.

To boost foreign exchange earnings in the country, the CBN and the bankers’ committee initiated the RT200 programme in February 2022.

The programme was fundamentally devised to innovatively tackle the fundamental problem associated with the repatriation of non-oil export proceeds.

“So far, we have recorded and continue to record resounding success with the RT200 programme,” he said. According to him, inflows through this programme in 2022 rose to about $1.6 billion and could surpass $2.5 billion by year-end.

“Under the rebate scheme of the programme, the central bank has reimbursed a total of N78.4 billion, which I consider a fair price to incur to stabilise our foreign exchange market,” Emefiele said.