The Naira gained 0.88 percent against the dollar on Thursday, reaching N1,125/$, breaking free from its three-day stability at N1,135 on the parallel market. Aboki FX data indicates a consistent moderation in Naira pressure, signaling a shift from last month’s gains at N1,310.
While the parallel market closed at N1,140 on Monday, it appreciated on Tuesday, closing at N1,135 per dollar. The Naira maintained this rate on Wednesday and Thursday, fostering a sense of stability in the foreign exchange market.
Despite these gains, the Naira experienced fluctuations against the US dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official exchange rate window. On Thursday, it weakened by 2.70 percent, quoting the dollar at N841.14 compared to N818.99 on Wednesday.
Naira gains in the black market
A black market operator, Saidu Abdulrahman, disclosed that the dollar now sells for N1,050, while they buy at N1,020, indicating a significant appreciation in the black market.
Addressing the sustainability of this upward trend, Johnson Chukwu, CEO of Cowry Asset Management Limited, emphasized the Central Bank of Nigeria (CBN) pivotal role. Chukwu highlighted the need for the CBN to maintain market liquidity by ensuring a sufficient supply of foreign exchange, asserting that this would drive up the value of the Naira and lower the value of foreign currencies, especially the US dollar.
Chukwu further explained that liquidity in the market would be contingent on improvements in the country’s crude oil production. He stated, “Whenever the CBN improves supply into the market, the Naira will appreciate at FMDQ, and whenever the supply is insufficient to meet demand, it will depreciate.” Emphasizing the CBN’s central role, he noted that market dynamics currently lack commercial viability, underscoring the necessity of CBN interventions to determine market outcomes.
In conclusion, the Naira’s recent gains in the parallel market signify a positive trend. Yet, the sustainability of this progress hinges on the CBN’s strategic actions to enhance market liquidity, potentially through increased crude oil production or government-backed borrowing initiatives.
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