Emmanuel OchayiIn a turn of events, the Naira staged a comeback against the dollar, marking a 27.16% appreciation at the official market on Monday, December 11th, 2023.
Following its historical low just days ago, the local currency closed at N864.29 to a dollar, according to data from the NAFEM.
Market data revealed an impressive rebound for the Naira, showcasing an increase of N234.76 or 27.16% compared to the Friday close of N1,099.05.
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However, the day saw significant fluctuations, with an intraday high of N1185.10/$1 and a low of N720/$1, reflecting a wide N465.10/$1 spread.
Despite the positive movement at the official market, the story was different at the parallel forex market. The Naira experienced a 1.26% depreciation, settling at N1195/$1, while peer-to-peer traders quoted around N1214.32/$1.
The Central Bank of Nigeria (CBN) addressed the backlog of foreign exchange forward obligations by making tranche payments to 31 banks. Additionally, the CBN announced the implementation of foreign exchange frameworks to tackle FX challenges.
Economists weighed in on the situation, emphasizing the importance of market confidence for stability. Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers, highlighted the significance of confidence in attracting foreign investment and retaining local investments.
He suggested that structural changes promoting import substitution and enhancing various sectors like security, infrastructure, and foreign direct investment were crucial.
Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, predicted continued volatility for the Naira due to ongoing forex supply concerns.
Speculative buying trends and increased long positions on the dollar while shorting the Naira could persist amid the dollar dearth.
The situation remains precarious despite the Naira’s substantial recovery, emphasizing the necessity of sustained efforts and policy measures to stabilize the forex market and restore lasting confidence among market participants.
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