Emmanuel OchayiIn a turn of events on Tuesday, the Nigerian naira exhibited an uptick against the dollar, closing at N806.73/$1 in the official market, marking a 3.85% appreciation.
The Forex turnover surged by 92.93%, hitting $142.63 million, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The currency showcased resilience, witnessing an intraday high of N1150/$1 and a low of N757/$1, displaying a considerable spread of N393/$1. However, in the parallel market, the naira marginally declined, exchanging at N1170/$1, as disclosed by the Central Bank of Nigeria (CBN).
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The CBN revealed it had initiated tranche payments to 31 banks to clear the backlog of foreign exchange forward obligations. It further emphasized the implementation of foreign exchange frameworks aimed at addressing FX challenges.
Economists weighed in on the situation, emphasizing the critical role of market confidence in stabilizing the exchange rate. Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers and MD of Arthur Steven Asset Management Limited, highlighted the importance of fostering confidence among investors for sustained stability. He emphasized the need for structural changes to encourage local production and reduce import dependency.
Bismarck Rewane, MD/CEO of Financial Derivatives Company Limited, forecasted ongoing naira volatility due to persisting concerns over forex supply.
He noted that the scarcity of the dollar might prompt speculative buying, leading to an increase in long positions on the dollar and shorting of the naira.
The developments underscore the complexities surrounding Nigeria’s currency dynamics, highlighting the necessity for sustained efforts to fortify market confidence and address underlying structural issues for long-term stability
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