The Naira has shown strength against the United States dollar, trading below N1,280 at both official and parallel markets.
This marks a positive start to the new month, with the Naira appreciating to N1,278.58 compared to N1,309.39 recorded the previous week. The increase of N30.81 indicates a bullish trend in trading.
This positive movement is the first time since January 26, 2024, that the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closed below the N1,300 mark.
It is a significant improvement considering the Naira depreciated to N1,615 against the dollar on March 13, 2024.
“The demand for dollars has really gone down and the naira is appreciating because of the new rate determined by the CBN for traders,” said Ibrahim Yahu, a BDC operator at Wuse Zone 4.
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“The CBN initially started selling to us at N1,251 but they gave another rate last week Thursday at N1,190 and that is the reason for new fresh drop of the dollar. The CBN selling directly to us has really helped trading activities,” he added.
Another trader, Malam Yunusa, stated that the naira was poised to maintain its gain against the dollar adding that operators also want the naira to grow.
Beyond Boders further reports that the President of the Association of Bureaux de Change Operators of Nigeria, Aminu Gwadabe, recently noted that apart from the tightening of monetary policy resulting in interest rate hikes, increased investment in government instruments, and the clearance of $7 billion forex backlog forward commitments, the reactivation of the BDCs has notably enhanced dollar liquidity in the retail segment of the forex market.
Increased liquidity in the forex market has resulted from these reforms, with forex turnover being a crucial indicator of market activity and economic stability.
The recent improvement in dollar supply by $2.5 billion, along with reduced forex transactions at the Nigerian Autonomous Foreign Exchange Market, reflects the positive impact of these policies.
In the parallel market, the Naira appreciated to N1,220 against the dollar after the Easter holiday, with Bureau De Change operators buying at N1,220 and selling at N1,265 per dollar.
This represents a 1.99 per cent appreciation over the previous week’s closing rate of N1,280.
Currency traders attribute the Naira’s appreciation to decreased demand for the dollar and the central bank’s intervention in selling foreign exchange directly to operators.
The President of the Association of Bureaux de Change Operators of Nigeria highlighted the role of BDCs in enhancing dollar liquidity in the retail segment of the forex market.
Analysts predict that the Naira will continue to trade within a similar band in April as the Central Bank of Nigeria maintains its efforts to stabilize liquidity and attract investment.
