One dollar is currently quoted at N1,560.57 on the official market, indicating a stronger naira driven by foreign exchange (FX) reforms.
The summary of the FX trading on Tuesday revealed that the naira appreciated by 0.79 percent as the dollar was quoted at N1,560.57, which was stronger than N1,572.86 quoted on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The naira has gained 4.28 percent of its value against the dollar when compared to the lowest of N1,627.40 per dollar closed on March 8, 2024, at NAFEM, according to data compiled from the FMDQ Securities exchange.
The intraday high closed at N1,626.50 per dollar on the spot on Tuesday while the intraday low closed at N1,415/$1 on the same day.
The daily foreign exchange market turnover printed at $195.13 million on Tuesday.
At the parallel market, also known as the black market, the naira strengthened further to 1,570 per dollar as against 1,590 closed on Monday.
Several analysts expect the naira to stabilize further this week, following the introduction of policy measures by the Central Bank of Nigeria.
Some of the reforms include the unification of the foreign exchange market; promotion of a willing buyer-willing seller market; removal of all limits on margins for the International Money Transfer Operator (IMTO) remittances; introduction of a two-way quote system and the broad reforms in the Bureau De Change (BDC) segment of the market to restore stability, enhance transparency, boost supply, and promote price discovery in the Nigeria Autonomous Foreign Exchange Market.
Oluyemi Cardoso, governor of the CBN said in his statement at the last rate decision meeting that “This strategic move also holds the potential to attract the capital inflows necessary to enhance liquidity in the foreign exchange market and bolster the currency in the immediate term.”
The pressure on the naira/dollar exchange rate is beginning to ease as Nigeria’s external reserves have sustained growth in one month.
Data from the Central Bank of Nigeria (CBN) showed that the foreign currency reserves increased by 3.62 percent to $34.37 billion as of March 12, 2024, from $33.17 recorded at the beginning of February 2024.
The CBN recently announced a remarkable upswing in Diaspora remittances, soaring by 433 percent to reach $1.3 billion in February, compared to $300 million in January.
The Monetary Policy Committee (MPC) meeting, which was held on February 26 and27, 2024, raised the MPR by 400 basis points to 22.75 from 18.75 percent, adjusted the asymmetric corridor around the MPR to +100/-700 from +100/-300 basis points, raised the Cash Reserve Ratio from 32.5 percent to 45.0 percent, and retain the Liquidity Ratio at 30 percent.
“It is imperative to break the cycle of inflation as a prerequisite for sustained economic growth and to stabilize the exchange rate, following the Naira’s sharp depreciation in recent months,” said Aloysius Uche Ordu, a member of the MPC.
Kalu Aja, the personal finance expert, said, on X, formerly Twitter, “We need stable Naira”. What is stability? Stability is supply. You are simply saying you want “6” not “half a dozen” Stability occurs when there is a supply to match demand narrowing the spread. So please stop saying “We want a stable Naira” as if it’s some strategy.”