Naira Rises to N414/$1 at Official Market, Jumps to N535/$1 at Parallel Market

The Naira has appreciated slightly against the US Dollar, taking one step up on Wednesday to N414 per dollar from the N415 at which it closed on Tuesday.

According to the FMDQ group, on Wednesday the naira opened at N413.89 – a difference of over N1 from what it closed at on Tuesday. However, the naira had fallen slightly again to N414.73 by the close of the day. Overall, the naira appreciated slightly, although these fluctuations are not mostly significant. The fluctuations are a normal expectation of the foreign exchange market, therefore unless there is a steady increase or a huge jump we cannot truly say the naira’s appreciation is significant enough for the economy.

The FMDQ updated the Spot and Forward rates for Wednesday’s trading, although there was not much difference between Tuesday’s numbers and Wednesday’s numbers. The Spot rates remained the same, rising to N404 and falling to N444 per dollar. The Forward rates changed slightly however, rising to a mere N445 compared to yesterday’s rise to N411, and falling to N453 per dollar.

On the parallel market, naira experienced a huge jump as it went from N570 per dollar which it had been trading at for days to N535 per dollar.

Naira has not traded at this level since September, marking a two-month high for the currency. Check to find out the reason for the huge surge in the black market price revealed that the CBN had bolstered dollar liquidity earlier in the week.

Lucky Agana, managing director of Gulkay integration services said that the CBN had introduced more dollars into the market, drastically meeting some of the demand for the currency and in turn causing the value of the naira to appreciate. Agana praised the apex bank’s forex policy, stating that there was a heightened supply of the dollar but lesser demand for the foreign currency.

A BDC operator touted the e-naira as the reason for the rise, stating that Nigerians’ hunger for buying dollars had reduced since they could now withdraw dollars at official rates anywhere in the world through the e-naira.

The exchange rate had generally stabilized since last month, when the CBN publicly antagonized abokiFX. Since then, the naira had generally traded at between N564/$1 to N575/$1, until yesterday when it saw the huge rise to N535/$1.

The strengthening of the naira will be seen by the CBN as evidence that its intervention is working, even though said intervention is mostly funded by loans.