The naira experienced a significant appreciation of 0.68 per cent against the United States dollar on the Investor & Exporter (I&E) forex window.
The local currency closed at N763/$ on Tuesday, displaying a notable improvement from N768.17/$ at the close of trading on Monday.
It is important to note that trading was not conducted on Wednesday due to the two-day public holiday observed in celebration of Sallah.
However, figures obtained from the FMDQ indicated that trading on Tuesday began at N760.5/$, reaching a high of N841/$ and a low of N467/$ before finally closing at N763/$.
Tuesday’s trading session recorded an improved turnover of $245.65 million, compared to $198.13 million at the close of trading on Monday.
This surge in trading volume demonstrates increased investor confidence and a greater influx of foreign currency into the Nigerian market.
This positive development follows the directive from the Central Bank of Nigeria (CBN) instructing Deposit Money Banks (DMBs) to eliminate the rate cap on the naira at the I&E window, allowing for a free float of the national currency against the US dollar and other global currencies.
Previously, the naira had closed at 471.67/$ in the I&E window, while the parallel market recorded an exchange rate of 740/$.
Leading economists have applauded the move towards a more flexible exchange rate system. Professor Segun Ajibola, an esteemed economist and former President of the Chartered Institute of Bankers of Nigeria, described the former multiple exchange rate regime as a breeding ground for corruption.
He emphasized the importance of expanding foreign exchange sources, such as non-oil exports, remittances, and foreign direct investments, while maximizing Nigeria’s OPEC quota on crude oil exportation.
According to Prof. Ajibola, these measures, coupled with an increase in the supply of foreign exchange, can alleviate the pressure on both the official and unofficial markets.
He expressed optimism that the two rates will eventually converge, resulting in a unified and desirable exchange rate.
Meanwhile, the ongoing foreign exchange reforms have extended to the maritime sector. The Central Bank of Nigeria and the Nigeria Customs Service have implemented a 40 per cent increase in the exchange rate used for calculating import duty.
The exchange rate has risen from N422.30/$ to N589/$, reflecting the commitment of authorities to streamline and strengthen Nigeria’s foreign exchange policies.
