Emmanuel OchayiThe Nigerian Naira on Monday showed resilience at the official forex window, appreciating by 1.09% to close at N1,419.86/$.
This positive shift follows reassurances from the Central Bank of Nigeria Governor, Olayemi Cardoso, who emphasized the institution’s commitment to addressing currency volatility.
While the official market witnessed this improvement, the parallel market depicted a different narrative. Bureau de Change operators reported the naira trading between 1,440/$ and 1,460, indicating ongoing challenges outside the regulated channels.
Speaking to Prime Business Africa, Abubakar Abdul, a BDC operator, attributed the dollar’s gradual gain against the naira to the activities of hoarders. “Today, we sell dollars at 1,455/$ but we are buying at 1,445/$,” he stated, shedding light on the dynamics influencing the parallel market.
Cardoso, in a statement, outlined the central bank’s efforts to address bottlenecks hindering FX supply. He highlighted measures taken to enhance remittance flows, curb banks’ ability to hold positions, and make naira assets appealing to foreign investors.
The governor emphasized the need for economic stability, inflation control, and the promotion of local businesses for sustained naira strength.
However, challenges persist, with some BDC operators citing hoarding as a contributing factor to the dollar’s ascent against the naira. Despite Cardoso’s assurance of ongoing efforts, the gap between the official and parallel markets remains noteworthy.
Cardoso also provided insights into the central bank’s actions to clear FX backlogs, revealing that $2.4bn of the $7bn backlog encountered had contentious issues. He detailed infractions ranging from invalid import documents to entities that did not exist, underscoring the complexity of the task at hand.
This news comes against the backdrop of Nigeria’s downgrade by FTSE Russell to an “unclassified” market in September 2023, citing challenges faced by foreign investors in repatriating funds. The central bank’s clearing of FX backlogs, initiated in November 2023, reflects an ongoing effort to navigate these intricate financial landscapes.
