Dollar Bows as Naira Stages Remarkable Recovery in Both Official and Black Markets

• Nigeria's local currency, the naira, has made a strong comeback, signalling increased market confidence
• The naira appreciated in both the official and unofficial market, commonly referred to as the black market
• The recent appreciation of the naira is attributable to the new policies implemented by the leadership of the CBN

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

On Friday, April 12, 2024, the naira witnessed a significant surge in value on the official market, reaching a trading rate of N1,142.38 against the dollar.

Information obtained from the FMDQ Exchange's official trading platform, which supervises the Nigerian Autonomous Foreign Exchange Market, indicates that the naira experienced an increase of N88.23.

This uptick reflects a 7.16% rise compared to the preceding trading session on Monday, April 8, when it was valued at N1,230.61 per dollar prior to the Sallah holiday.

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Naira mounts impressive comeback against dollar

According to the News Agency of Nigeria, in the Investor's and Exporter's window, the naira was seen trading within the range of N1,265 and N1,100 in relation to the dollar.

Additionally, the naira exhibited appreciation, reaching N1,150 per dollar within the parallel section of the foreign exchange (FX) market, according to TheCable report.

Currency traders operating in Lagos, commonly referred to as Bureau de Change (BDC) operators, set the buying rate of the dollar at N1,110 and the selling rate at N1,150, thereby maintaining a profit margin of N40.

One of the operators, Alhaji Danladi Musa, who spoke with Legit.ng said that the exchange rate is coming down drastically due to the central bank policies.

He said:

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"We have seen the naira appreciate since the CBN decided to resume selling dollars to us. Presently, individuals hoarding dollars are offloading them to mitigate potential losses. This trend has alleviated the pressure to acquire dollars, evident in the significant improvement of the naira's value over the past few weeks."

The total daily turnover surged to $281.34 million on Friday, a notable increase from the $125.55 million recorded on Monday.

CBN's new policies responsible for naira surge

The recent surge in the value of the naira follows closely after the Central Bank of Nigeria (CBN) initiated the third phase of sales of dollars to BDC operators.

On April 8, the apex bank sold foreign exchange to BDC operators at a rate of N1,101 per dollar.

Concurrently, the CBN issued a directive to all banks to cease the acceptance of foreign currency-denominated collaterals for naira loans on the same day.

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These actions underscore the CBN's commitment to enhancing liquidity and fortifying the naira's position in the financial landscape.

Naira world's top-performing currency in April

In related news, Legit.ng reported that Goldman Sachs has hinted at the possibility of the naira surpassing this projection and trading even lower against the dollar.

Economists at the company said the naira had already established itself as the top-performing currency globally in April.

They added that the local currency was expected to extend its gains amid the continuing effective policy management by the CBN.

Source: Legit.ng