Naira Gets a Boost as Dollar Supply Rises to $7 Billion in Official Market
- The Nigerian foreign exchange market witnessed an improved dollar inflow in March and April
- Data from the FMDQ Exchange indicates that forex sales in the two months hit a substantial $7.3 billion
- The development led to the naira emerging as the world’s best-performing currency in April
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Dollar supply in the official forex market hit $7.3 billion in March and April 2024.
According to data from the FMDQ Exchange, FX sales records show improved liquidity in the market, as $4.7 billion in transactions were recorded in March 2024.
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Dollar supply rises by 51%
Findings show that FX sales declined by 51% monthly to $2.5 billion, which coincided with the naira appreciation in April.
A Legit.ng report said the Central Bank of Nigeria had begun selling forex to Bureau de Change (BDC) operators to improve forex liquidity in the system.
Analysts believe that the FX sales to the operators spurred the naira's performance in April, making the Nigerian currency the world’s best-performing currency.
The naira has been on a downward spiral for eight straight days, losing about 5.5% in value, the highest loss since March 13 this year.
Naira sustains loss against the dollar
Punch reports that the naira dropped in value following slowed inflows and sustained withdrawals by the Foreign Portfolio Investment.
On Tuesday, April 30, 2024, the naira reached an intraday high of N1,450 per dollar, up from the previous day's N1,451.
Traders quoted the local currency at an intraday low of N1,200, compared to the N1,060 recorded on Monday, April 29, 2024, at NAFEM.
Analysts say Nigeria needs a sustained inflow
Dollar supplies appreciated by 34.4% or $77.53 million to $225.36 million from $147.83 million recorded on Monday, April 29, 2024.
Data and financial analyst Maurice James stated that Nigeria witnessed increased dollar demand after the Easter break as international students began to return to schools abroad.
“I think the pressure mainly came from demands from international students returning to schools abroad. Also, diaspora remittances have slowed since April.
“Remember that the Nigerian economy witnessed a monumental FX inflow in February and March, which contributed to offsetting the forex backlog and led to the naira’s appreciation.
“We know that it is not rocket science that sustained inflows lead to the naira’s appreciation, and if the country is not getting enough FX inflows, the naira bears the brunt,” James said.
Naira hits lowest in all markets since march
Legit.ng earlier reported that the naira has crashed to its lowest level since March in the official and parallel markets, with the exchange rate between the naira and the dollar selling for N1,419 per dollar.
The current rate is the first time since March this year that the naira has depreciated below N1,400 per dollar.
The naira has depreciated for eight days since it last appreciated close to N1,000 per dollar at the official foreign exchange market since the Central Bank of Nigeria (CBN) introduced several policies to boost market confidence.
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Source: Legit.ng
