N1,338: CBN Releases New Exchange Rates As Naira Gains Against Dollar
- The naira strengthened by N1.31 against the US dollar at the official market to close at N1,329.16/$1 on Wednesday
- FX market turnover jumped 122.9% to $179.58 million as the number of transactions increased to 94
- CBN says net usable external reserves have risen to about $40 billion from $859 million in 2023
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The Nigerian naira strengthened against the United States dollar at the official foreign exchange market on Wednesday, September 30, as increased trading activity boosted market turnover.
The local currency appreciated by N1.31, or 0.09%, to close at N1,329.16/$1 in the Nigerian Foreign Exchange Market (NFEM), compared with N1,330.47/$1 recorded on Tuesday.
Source: Getty Images
However, the naira weakened against the British pound sterling and the euro during the same trading session.
It depreciated by N5.97 against the pound to close at N1,766.59/£1, compared with N1,760.62/£1 on Tuesday.
Against the euro, the naira lost 50 kobo to close at N1,510.06/€1, compared with the previous rate of N1,509.56/€1.
At the parallel market, the naira remained stable at N1,370/$1, while the exchange rate at GTBank's foreign exchange desk also held steady at N1,338/$1.
FX trading activity rises
Data from the Central Bank of Nigeria showed that turnover in the interbank foreign exchange market rose significantly during the session.
According to the data, turnover increased by 122.9% to $179.577 million from $80.582 million previously.
The number of deals executed at the official market also climbed to 94 from 37, indicating a sharp increase in trading activity.
The higher liquidity comes amid stronger external reserve levels, which have provided the CBN with greater capacity to manage short-term pressure in the foreign exchange market.
Nigeria's gross foreign exchange reserves rose to about $54.6 billion in mid-September, the highest level in more than 18 years.
CBN raises net reserves to $40bn
The improvement in the country's external position comes after a series of foreign exchange and monetary policy reforms implemented by the CBN.
The apex bank disclosed that Nigeria had only $859 million in net usable external reserves when the current administration assumed office in 2023.
Source: Getty Images
The figure was below the amount required to cover one month of the country's import obligations, according to the CBN.
Deputy Governor, Corporate Services, Muhammad Abdullahi, disclosed the figures on Tuesday at the opening of the 38th Seminar of Finance Correspondents and Business Editors in Abuja.
Abdullahi said reforms implemented by the CBN had helped increase Nigeria's net external reserves to about $40 billion three years later.
Net external reserves refer to the foreign exchange available for immediate use after accounting for known short-term obligations.
This differs from gross foreign exchange reserves, which represent the broader stock of foreign assets held by the country.
Monetary policy easing
Earlier, Legit.ng reported that the naira's performance also comes amid a shift in the CBN's monetary policy stance.
The Monetary Policy Committee recently reduced the Monetary Policy Rate by 350 basis points to 23.0%, marking a significant easing of the benchmark interest rate.
The combination of stronger external reserves, increased foreign exchange market activity, and recent monetary policy changes continues to shape conditions in the naira market.
Source: Legit.ng
