The value of the naira continued its appreciation against the dollar on the first trading day of the month closing at N1,278.58 to the dollar at the official end of the market, hitting the highest level in over two months.
At the close of trading on Tuesday at the Nigerian Autonomous Foreign Exchange (NAFEM) window, the naira appreciated by N24.75 to close at N1,278.58 to the dollar compared to N1,303.33 which it closed last week Thursday.
This is the highest the naira has gone since it began a free fall on January 26 this year when it depreciated from N891.9 to the dollar to N1,348.62 to the dollar. The naira had continued to fall, hitting its lowest point so far this year at N1,615 to the dollar at the official window before picking up.
The improved value of the naira is not unconnected with a series of policies embarked on by the Central Bank of Nigeria (CBN).
Meanwhile inflow at the market remained high with a turnover of $111.18 million.
During the day’s trading activities, trades had been consummated at various prices with the lowest spot rate of N1,312 while the highest spot rate was N1,250 to the dollar, a disparity of N62 between the highest and lowest level.
The naira opened Tuesday after the Easter holiday, with appreciating to 1,238.3 as Bureau De Change (BDC) operators bought at N1,220 per dollar, cash and transfer to customers at N1,265/$.
The Naira appreciated further to 1,225 per dollar on the parallel market, also known as black market.
This represents 1.99 per cent appreciation over N1,280 closed last week.
The Naira strengthened in both the official and parallel market segments following the Central Bank of Nigeria (CBN)’s move to clear all verified FX backlogs (final tranche of $1.5bn).
The Naira which appreciated by 21.8 per cent month-on-month in March 2024 is expected to maintain the trend in April, following the policy measures of the Central Bank.
A report by Afrinvest Securities Limited noted that Naira strengthened 21.8 percent m/m against the base currency
(USD) to exchange at N1,309.39/$1.00 at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window in the just concluded month.
In the parallel market segment, the Naira gained 19.6 percent m/m against the USD to close at N1,300.00/$1.00. Similarly, daily average turnover in the NAFEM segment improved by 8.7 percent m/m to settle at $857.8m (as at 28/03/2024).
Our outlook for April suggests that the naira would trade within a similar band as the CBN continues its activities to mop up liquidity and attract more capital inflow via increased Open Market Operations (OMO) sales following its decision to raise the Monetary Policy Rate (MPR) by 200 bps to 24.75 percent,” analysts at Afrinvest said.
Aminu Gwadabe, president, Association of Bureaux de Change Operators of Nigeria (ABCON) said aside monetary policy tightening that led to interest rate hike and more investment in government instruments and clearance of $7 billion forex backlog forward commitments, the recall of the BDCs has significantly boost dollar liquidity at the retail end of the forex market.
