Emmanuel OchayiThe Nigerian naira on Monday, December 4th, 2023, experienced a surge in value, closing at N837/$1 in the official market.
This surge has breathed fresh optimism into the market, following the Central Bank of Nigeria’s (CBN) move to alleviate a portion of its FX backlog.
Join our WhatsApp ChannelExperts had keenly anticipated this positive trajectory, aligning with the CBN’s initiative.
The currency’s appreciation of 10.67% at the close of business on Monday, according to data from the NAFEM (Nigeria Autonomous Foreign Exchange Market), exemplified a gain of N89.42 compared to its previous closure at 927.19.
READ ALSO: Naira Drops By 11.39% To Hit N927/$1 In NAFEM, N1165/$1 In Parallel Market
The market saw a fluctuation between an intraday high of N1021/$1 and a low of N701/$1, representing a considerable spread of N320/$1.
Additionally, the forex turnover at the end of trading marked a 32.87% increase, totalling $73.94 million compared to the previous day.
However, in the parallel forex market, the naira remained steady, closing at N1165/$1, the same rate as Friday, while peer-to-peer traders quoted around N1161.55/$1.
The governor of CBN, Yemi Cardoso disclosed during the bankers’ dinner in Lagos that the CBN had executed tranche payments to 31 banks, effectively clearing the backlog of foreign exchange forward obligations. He further outlined the establishment of foreign exchange frameworks to address existing FX challenges.
Cardoso shared in his statement: “We have witnessed improvements in FX market liquidity in recent weeks, responding positively to tranche payments made to banks. Our focus remains on ensuring valid transactions are honoured, fostering a well-functioning market where daily trade could surpass $1.0 billion. Rebuilding foreign exchange reserves to comparable levels is our envisioned goal.”
The consistent decline in the value of the Nigerian currency had been a cause for concern, attributed to foreign exchange illiquidity and the challenge of settling the forex backlog.
However, the measures undertaken by the CBN have injected renewed hope into the market, fostering a brighter outlook for the naira’s stability and market confidence.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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