The Nigerian naira showed resilience against the United States dollar on Thursday, marking a steady appreciation as it closed at 1,382/$ at the official market, marking an increase of N18. This positive development followed a warning from the Presidency to currency speculators against undermining the national currency, emphasizing that offenders would face consequences.
The naira’s upward trend continued from the previous day, where it made significant gains across both official and parallel foreign exchange markets, closing at N1,400/dollar in the parallel market on Wednesday. Data from the FX trading auction revealed a 1.3 percent appreciation in the naira’s value, attributed to heightened dollar supply at the Nigerian Autonomous Foreign Exchange Market, as reported by FMDQ Securities Exchange Limited.
The intraday high on Thursday saw the naira strengthen to N1,598 per dollar, surpassing Wednesday’s close at N1,620, while the intraday low also improved to N1,300/$ compared to N1,350/$ the previous day. The total dollar supply in the FX market increased to $288.47 million, up by 7.46 percent from $268.29 million recorded on Wednesday.
In recent weeks, the naira has witnessed a notable gain of N500 against the dollar, marking a significant turnaround from its record low earlier this year in the unofficial market, as the Central Bank of Nigeria (CBN) works to restore confidence in the FX market.
Addressing concerns over foreign exchange backlogs, the CBN announced successful resolution of all valid claims, fulfilling Governor Olayemi Cardoso’s commitment to settle inherited obligations amounting to $7 billion. Acting director of corporate communications, Hakama Sidi Ali, confirmed the finalization of a $1.5 billion payment to clear obligations to bank customers, thereby eliminating the remaining balance of the FX backlog. Cardoso reiterated the importance of clearing these backlogs to bolster credibility and confidence in the Nigerian economy.
The strain on the naira/dollar exchange rate appears to be easing, with Nigeria’s external reserves witnessing sustained growth over the past month. CBN data revealed a 3.62 percent increase in foreign currency reserves to $34.37 billion as of March 12, 2024, compared to $33.17 billion at the beginning of February 2024. Furthermore, Diaspora remittances surged by 433 percent to $1.3 billion in February, up from $300 million in January.
Special Adviser on Information and Strategy, Bayo Onanuga, urged currency traders to sell off their dollar holdings, anticipating further appreciation of the naira. He cautioned speculators against potential losses, emphasizing the need to act swiftly.
Wednesday’s trading saw the naira close at 1,410/dollar in the parallel market and N1,492 at the official Nigerian Autonomous Foreign Exchange Market, reflecting a 4.5 percent appreciation from the previous day’s N1,560/$1 at NAFEM and a 13.5 percent gain at the parallel market.
The recent surge in the naira’s value can be attributed to speculators offloading their dollar stocks amid reduced demand and intensified CBN interventions. Measures taken by the CBN, including regulatory circulars and crackdowns on illegal BDC operators in Lagos, Abuja, and Kano by the Economic and Financial Crimes Commission, have contributed to stabilizing the naira’s volatility.
