Naira Nears N1,000/$1 At Parallel Market As Traders Anticipate Further Gains

The Nigerian naira is on an upswing against the United States dollar, reaching N1,136/$ at the official market and N1,050/$ at the parallel market by the close of trading on Monday.

Traders are optimistic, foreseeing the dollar’s decline to dip below N1,000 by the week’s end.

Data from the FMDQ Exchange reveals a significant surge of 6.1% in the official market, with the naira climbing from N1,205/$ on Friday to N1,136/$ on Monday. Despite a slight drop in daily turnover to $251.60m, the intra-day high also witnessed a notable improvement, closing at N1,227 per dollar.

The recent appreciation in the naira follows a series of foreign exchange directives by the Central Bank of Nigeria (CBN) aimed at stabilizing the currency. The CBN recently announced the resolution of valid foreign exchange backlogs amounting to $7 billion, further boosting market confidence.

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Additionally, total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) surged by 41.7% to $3.75 billion, the highest level since March 2019. The CBN’s decision to review the exchange rate for Bureau De Change operators to N1,101 per dollar is also contributing to the currency’s stability.

However, despite the positive outlook, currency traders at the unofficial market express concerns over dwindling profits. Malam Ibrahim, a trader, lamented the reduced demand for dollars, stating that the business has become less profitable. He highlighted buying rates between N950 and N980 and selling rates between N1,010 and N1,020.

Another trader echoed similar sentiments, noting a decline in demand and a subsequent drop in rates. Some traders reported buying as low as N900 and selling at N940 per dollar. These challenges stem from sluggish demand and the impact of CBN policies, which are affecting market dynamics.

Goldman Sachs Group, in a recent report, acknowledged the naira’s stellar performance globally in April. The investment company attributed this success to effective policy management by the CBN, including significant interest rate hikes. Initially forecasting the naira to strengthen to N1,200/$ in 2024, Goldman Sachs now anticipates even further gains, underscoring the resilience of the Nigerian currency amidst evolving economic landscapes.