Emmanuel Ochayi
In a turn of events, the Naira demonstrated fortitude by appreciating to N869.13/$1, thereby, gaining further ground against the dollar at the official market on Friday, marking its second advance in the New Year.
Despite this positive upturn, experts emphasised the need for market confidence and structural changes to ensure stable exchange rates.
Join our WhatsApp ChannelThe local currency strengthened by 3%, closing at N869.13 to a dollar at the NAFEM, the official forex trading platform. This signifies a substantial increase compared to the previous day’s closing rate of N895.23, marking a N26.1 gain.
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Nevertheless, the parallel forex market reflected a contrasting scenario, witnessing a decline in the Naira’s value. Unofficial exchanges quoted rates at N1,255/$1, exhibiting a 1.99% drop from the previous day. Peer-to-peer traders quoted slightly lower at around N1,231.70/$1.
Commenting on the fluctuating market conditions, Mr. Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers and MD of Arthur Steven Asset Management Limited, stressed the significance of confidence in stabilizing exchange rates.
“Confidence is crucial for both foreign and local investments. Without it, the market faces instability due to demand outstripping supply,” Amolegbe stated.
Adding to the discourse, Bismarck Rewane, MD/CEO of Financial Derivatives Company Limited, cautioned about lingering forex supply concerns leading to continued volatility in the Naira.
He pointed out the likelihood of speculative buying trends persisting, further complicating the market dynamics.
Both experts underscored the necessity for structural changes, including enhanced security, infrastructure development, increased foreign direct investments, and support for local production, as pivotal factors in achieving lasting stability in the exchange rate.
While gains offer a glimpse of hope, the conversation among financial experts highlights the need for broader systemic improvements to ensure a sustained and steady Naira performance against the dollar.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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