Emmanuel OchayiThe Nigerian Naira showcased a slight but noteworthy gain against the dollar on Monday, 18th December 2023, demonstrating fluctuations in both official and parallel markets.
Registering a 0.17% appreciation, the currency closed at N888.35 to a dollar, marking a notable shift from the previous day’s N889.86 close, according to data obtained from the NAFEM (Nigeria Autonomous Foreign Exchange Market).
At the intraday high, the Naira hit a record-breaking N1185.10/$1 and a low of N720/$1, showcasing an expansive N529/$1 spread, indicating considerable volatility within the forex market.
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The trading day concluded with an increase in forex turnover, amounting to $137.82 million, a staggering 230.82% surge compared to the prior day’s figures, as per official NAFEM window data.
Moreover, at the unofficial parallel market, the Naira exhibited gains, quoting an exchange rate of N1235/$1, signifying a 0.81% increase from the previous day. Peer-to-peer traders, on the other hand, settled around N1214.10/$1.
In a bid to address the forex backlog, the Central Bank of Nigeria (CBN) disclosed the disbursement of tranche payments to 31 banks and unveiled frameworks aimed at tackling existing FX challenges.
Financial experts weighed in on the situation. Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers and Managing Director of Arthur Steven Asset Management Limited, emphasized the pivotal role of confidence in stabilizing the exchange rate.
He stressed the need for robust measures such as improving infrastructure, enhancing security, and stimulating foreign direct investments to foster market stability.
Echoing similar sentiments, Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, projected ongoing naira volatility due to persisting concerns over forex supply shortages.
Speculative buying trends were anticipated to continue, with more market participants favoring long positions on the dollar while shorting the naira.
“As demand outpaces supply, fostering market confidence through structural changes remains imperative for long-term stability,” commented Amolegbe, emphasizing the need for a comprehensive approach to address prevailing forex challenges.
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