Naira Appreciates To N831/$1 In Official Market Amid CBN’s FX Initiative

The Nigerian naira witnessed a 6.06% appreciation against the dollar, closing at N831.47 on Wednesday at the official market.

This upturn follows the Central Bank of Nigeria’s (CBN)  move to address the FX backlog, fostering renewed optimism among experts and investors.

Yemi Cardoso, Governor of the CBN, affirmed the positive impact of initiatives at the bankers’ dinner in Lagos, stating, “We have already witnessed improvements in FX market liquidity in recent weeks… It is reasonable to expect significant FX liquidity, with daily trade potentially exceeding $1.0 billion.”

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Market data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) revealed a gain for the naira, reflecting a resurgence in confidence. However, the informal forex market depicted a contrasting picture, showing a slight depreciation in the naira’s value.

The CBN’s efforts to clear the backlog of foreign exchange forward obligations by making tranche payments to 31 banks have been crucial. Cardoso highlighted, “In a properly functioning market, it is reasonable to expect significant FX liquidity.”

The trajectory marks a positive shift from the persistent decline in the naira’s value, triggered by foreign exchange illiquidity and mounting forex backlog challenges.

Expert sentiments echo a hopeful outlook, emphasizing the potential for rebuilding foreign exchange reserves to levels akin to economies of similar stature.

This resurgence signifies a promising step toward stabilizing the Nigerian currency and restoring market confidence in the country’s economic landscape.