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The Naira has experienced a strengthening trend on the official market, reaching N1,560.57 against the dollar, driven by foreign exchange (FX) reforms.
Tuesday’s FX trading summary revealed a 0.79 percent appreciation of the Naira, with the dollar quoted at N1,560.57, compared to N1,572.86 on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
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Moreover, indications suggest that the benchmark interest rate may see further increase in the upcoming Monetary Policy Committee meeting next week. Reports gathered indicate that Dr. Olayemi Cardoso, the Central Bank of Nigeria (CBN) governor, advocated for the highest rate hike at the previous meeting.
The Naira has seen a 4.28 percent increase in value against the dollar compared to its lowest point of N1,627.40 per dollar on March 8, 2024, at NAFEM.
Intraday trading saw the Naira close at a high of N1,626.50 per dollar and a low of N1,415/$1 on Tuesday, with a daily foreign exchange market turnover of $195.13 million.
At the parallel market, also known as the black market, the Naira further strengthened to 1,570 per dollar, compared to 1,590 on Monday.
Several analysts anticipate further stabilization of the Naira this week following policy measures implemented by the Central Bank of Nigeria.
These reforms include the unification of the foreign exchange market, promotion of a willing buyer-willing-seller market, removal of limits on margins for International Money Transfer Operator (IMTO) remittances, introduction of a two-way quote system, and broader reforms in the Bureau De Change (BDC) segment to restore stability and transparency.
Dr. Cardoso emphasized the potential of these strategic moves to attract capital inflows and enhance liquidity in the foreign exchange market.
Additionally, Nigeria’s external reserves have shown consistent growth over the past month, reaching $34.37 billion as of March 12, 2024, up from $33.17 billion recorded in February.
The recent surge in Diaspora remittances, soaring by 433 percent to $1.3 billion in February, compared to $300 million in January, also reflects positively on Nigeria’s economic landscape.
The Monetary Policy Committee meeting in February raised the Monetary Policy Rate (MPR) by 400 basis points to 22.75 percent, adjusted the asymmetric corridor around the MPR, raised the Cash Reserve Ratio, and retained the Liquidity Ratio.
Stakeholders emphasized the importance of breaking the cycle of inflation for sustained economic growth and exchange rate stability, underscoring the need for increased supply to match demand and narrow the spread in the foreign exchange market.
