Emmanuel OchayiNigerian Naira strengthened against the US Dollar, marking a 1.52% gain and closing at N872.59 to a dollar on the first trading day post-Christmas.
The official market saw a surge in forex turnover, hitting $127.93 million, showcasing a 38.81% increase compared to the previous day.
According to data from the official NAFEM window, the Naira hit an intraday high of N1235.65/$1 and a low of N740/$1.
Conversely, the parallel forex market observed a slight dip with the exchange rate quoted at N1233/$1. Peer-to-peer traders quoted around N1197.60/$1, indicating varied rates across platforms.
The Central Bank of Nigeria (CBN) made tranche payments to 31 banks to clear the backlog of foreign exchange forward obligations. Moreover, the CBN disclosed the establishment of foreign exchange frameworks to tackle ongoing FX challenges.
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Commenting on market stability, Mr. Olatunde Amolegbe, the former President of the Chartered Institute of Stockbrokers, emphasized the pivotal role of confidence in stabilizing exchange rates. He highlighted the significance of market and participant confidence in attracting investments and reducing demand-supply imbalances.
Echoing concerns about currency volatility, Bismarck Rewane, the Managing Director/CEO of Financial Derivatives Company Limited, foresees continued naira volatility due to the lingering forex supply gap. He noted the likelihood of speculative buying, with more market participants taking long positions on the dollar and shorting the naira, given the dollar dearth.
The experts emphasised the importance of sustained efforts towards structural changes, import substitution, enhanced security, improved infrastructure, increased foreign direct investments, and stimulating local production to ensure long-term stability and growth in the forex market.
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