Naira Strengthens To N1,309/$1 As CBN Boosts Dollar Supply By $2.5bn

In a move to stabilize the foreign exchange market, the Central Bank of Nigeria (CBN) and other banking institutions have injected $2.5 billion, leading to a strengthening of the naira against the United States dollar.

The naira closed at N1,309 against the dollar on Thursday, up from N1,300 the previous day, according to official figures from the FMDQ Securities Exchange.

“This influx of dollars is a positive step towards stabilizing our currency,” remarked Mr. Adeolu, a currency trader in Lagos. “It brings a sense of relief to both traders and the general public.”

Forex transactions at the Nigerian Autonomous Foreign Exchange Market also surged by 106 percent, reaching $857 million on Thursday, the highest level since the implementation of new forex policies by the CBN.

“This is a significant improvement,” said Mrs. Abimbola, a forex analyst. “Such high turnover rates suggest increased confidence in the market and the economy.”

The recent developments mark a departure from the eight-week low experienced by the naira, signaling a potential turnaround in its fortunes. The intraday high closed at N1,392 on Thursday, while the intraday low appreciated to N1,250, indicating fluctuations in market dynamics.

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“This injection of dollars has a ripple effect on various sectors of the economy,” explained Dr. Yusuf, an economist. “It can lead to increased liquidity, which stimulates economic activities.”

The CBN’s recent policies, including the unification of exchange rate windows and clearance of FX backlog obligations, have been instrumental in boosting market confidence. Additionally, the overhaul of the Bureau De Change segment and the imposition of limits on banks’ Net Open Position aim to curb excessive speculation and hoarding.

“The CBN’s measures are timely and necessary,” stated Mr. Ibrahim, a financial expert. “They demonstrate a proactive approach to managing our forex reserves and stabilizing the currency.”

Despite the positive developments, challenges remain, particularly in addressing hoarding and illicit forex activities. The CBN’s efforts to clear valid foreign exchange backlog and settle obligations are steps in the right direction towards restoring market integrity.

At the parallel market, the naira’s appreciation continues, with the US dollar currently selling at N1,280. This reflects the impact of recent forex policy measures by the CBN.

“The naira’s appreciation is welcome news for businesses and consumers alike,” remarked Ms. Chioma, a small business owner. “It enhances purchasing power and reduces the cost of imported goods.”

Overall, the increased dollar supply and market liquidity signify progress towards a more stable forex environment, fostering economic growth and investor confidence in Nigeria’s currency.