Naira Trade Against the Dollar for N1,262 on Wednesday

A recent report revealed that the naira has continued to strengthen against the US dollar as it re-recorded a positive move on Wednesday, much to the delight of Nigerians, both at the official foreign exchange market and on black markets.

According to data from the FMDQ Securities Exchange, the dollar traded for N1,262.85/$ on Wednesday at the Nigerian Autonomous Foreign Exchange Market, which signifies an increase of N16 or 1.26%, from how it closed on Tuesday at N1,278.58/$.

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The naira has continued to rise against the US dollar, hitting 1,262/$, indicating that the local currency is expected to continue appreciating. The positive impact has been attributed to the consistent supply of dollars, which has also contributed to this.

The Central Bank of Nigeria has implemented different measures to counter the naira devaluation, which has increased the supply of dollars and improved market transparency.

On June 14, 2023, the CBN, among other reforms, eliminated market segmentation and combined everything into the Investors & Exporters window (now known as Nigerian Autonomous Foreign Exchange).

The CBN also instructed the International Money Transfer Operators in January 2024 to provide a quote for the naira payout to beneficiaries based on the current market rate.

In February 2024, the banking and finance regulatory body removed all limitations on the spread of foreign exchange transactions between banks and the sales of interbank proceeds. The CBN restricted the payment of Business Travel Allowance and Personal Travel Allowance to electronic channels exclusively during that same month.

After the CBN implemented several reforms to increase transparency and foreign exchange market inflows, the naira's volatility decreased in March 2024.

Speaking to The PUNCH, currency dealers explained the naira's rise due to the apex bank's decision to sell foreign exchange to operators and the declining demand for the US dollar.

A BDC operator at Wuse Zone 4, Ibrahim Yahu, stated, "The demand for dollars has gone down, and the naira is appreciating because of the new rate the CBN has determined for traders.

"The CBN initially started selling to us at N1,251, but they gave another rate last Thursday at N1,190, and that is the reason for the new, fresh drop of the dollar. The CBN selling directly to us has helped trading activities."

Similar to Tuesday's intraday high of N1,312/$1, the intraday low of N1,210.00 represented an improvement over N1,250/$1, and the intraday high was quoted at N1,296.00 on Wednesday.

The closing rate, intra-day high, and intra-day low, all below N130, also show the narrowest exchange rate difference. 

There was an increase in the average daily turnover to $116 million. $111.8 million.

In addition, the naira appreciated N1,250 to the dollar on the parallel market, also known as the "black market." This represents a gain of 0.8 percent (N10) over the N1,260 closing price on Tuesday.

The value of the naira against the dollar has increased by 46% since February 20, 2024, when it was at its lowest on the parallel market, N1,825/$.