Naira Appreciates in the Forex Market

Recent data collected from both market segments from the trading session on Wednesday showed that the value of the naira appreciated against the dollar on all foreign exchange markets.

The naira closed on Wednesday's trading session at N1,300/$1 when compared to the value of Tuesday's trading, which closed at N1,382.95, according to market data posted on the FMDQ website.

The rate on Wednesday signifies an increase of 6.0% over the N1,382.95 posted on Tuesday.

On Wednesday, the local currency closed at N1,300/$1, with an intraday high of N1,200 and a low of N1,460 to a dollar.

The official market segment's foreign exchange turnover for the business period was $416.10 million, compared to $245.58 million on Tuesday.

Also, the naira's upward trend continued on Wednesday in the parallel market.

According to recent surveys on the currency market, the naira was exchanged at N1,270/$1 and above on Wednesday afternoon at the Abuja Zone 4 axis.

This suggests an increase of N30, or 2.31%, from the N1,300 and higher it traded on Tuesday during the previous session.

Following the decline in the currency's value, the government has been working on different measures to stabilise the value of the local currency and reduce inflationary pressures in the nation. This has resulted in the recent gains the local currency has seen in official and unofficial markets.

The naira has experienced multiple record lows in official and unofficial markets due to a rise in demand for foreign exchange and an increase in the cost of goods and services throughout the nation.

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As a result, the Nigerian government implemented policies and changes to protect the nation's foreign exchange market and curb speculative activity.

On Monday, the Central Bank of Nigeria declared that to address the ongoing price fluctuations affecting the naira exchange rate in the forex markets, it had sold $10,000 to each Bureau De Change operator at a rate of N1,251 per US dollar.

Finance experts have linked the naira's recent gains to the government's ongoing reforms.

Back Story
In a recent circular, the Central Bank of Nigeria disclosed that Bureau De Change operators (BDCs) had been assigned $10,000 at N1,251/$1.

According to the circular released on Monday, the apex bank stated that all BDCs are mandated to sell the assigned dollars given to them to eligible customers at a rate not exceeding 1.5% above the purchase price. BDCs are expected to sell at a maximum of N1,269/$1.

However, CBN did not state how many BDCs got the distributed Forex allocation.

This circular followed the naira's appreciation at the Nigeria Autonomous Foreign Exchange Market (NAFEM), which closed on Monday at N1,408.04 to the dollar, marking the start of its continued appreciation.

This shows a growth of N14.81 or 1.04% appreciation, compared to N1,422.85 to the dollar when trading began.

The naira's appreciation can also be attributed to the CBN's recent policies, which are positioned to rescue the nation's currency, which has declined in value recently.