Naira Gains Against US Dollar, British Pounds and Euro on Black Market

The Nigerian Naira improved against global counterparts on the black market on Tuesday.

The local currency gained N7 against the US Dollar from N465 it traded on Wednesday to N458 today, Tuesday 6, October 2020.

The Naira has continued to increase with the renewed interest in the nation’s stock market following the central bank rate reduction.

The Central Bank of Nigeria had lowered the monetary policy rate by 100 basis points from 12.5 percent to 11.5 percent to stimulate growth and speed up the nation’s recovery process.

This rate adjustment prompted investors to jump on the nation’s undervalued stocks with strong fundamentals. The Nigerian Stock Exchange has been on a bullish run since the rate increase to take its total return to over 3 percent this year so far.

Similarly, the market capitalisation of listed equities crossed $15 trillion. Suggesting that the central bank’s recent policy adjustments are well embraced by capital market investors.

Against the European common currency, Euro, the Naira gained N5 from N445 per Euro to N440. While the local currency improved by N3 against the British Pound from N600 to N597.

Despite the series of policy adjustments, it is uncertain if businesses struggling to access scarce US dollar for business components in the real sector of the economy will be similarly impacted like the capital market investors or banks’ directors quickly acquiring their banks’ shares to profit from both dividends and price appreciation.