On March 22, 2024, the Nigerian currency, the naira, witnessed a notable appreciation against the United States dollar, closing at 1,382/$ in the official market, a gain of N18. This upward movement was highlighted a day after the naira saw substantial gains in both the official and parallel foreign exchange markets, with its value reaching N1,400/$ in the latter on the preceding Wednesday.
The Presidency issued a stern warning to currency speculators engaged in undermining the national currency, advising them against such unpatriotic acts and cautioning that such maneuvers would result in significant financial losses.
This appreciation is attributed to an increased dollar supply in the Nigerian Autonomous Foreign Exchange Market, as reported by the FMDQ Securities Exchange Limited, which saw the naira strengthen by 1.3 percent. The day’s trading witnessed the naira hitting an intraday high of N1,598 per dollar, showing improvement from N1,620 on Wednesday. Additionally, the intraday low saw a strengthening to N1,300/$, an improvement from the N1,350/$1 close of the previous day.
The dollar volume provided by FX market players saw a rise to $288.47 million, marking a 7.46 percent increase from $268.29 million on Wednesday and a significant leap from $195.13 million at NAFEM. Over recent weeks, the naira has made a notable recovery of N500 against the dollar from its record low this year in the unofficial market, bolstered by the Central Bank of Nigeria’s (CBN) efforts to restore confidence in the FX market.
The CBN announced the resolution of all valid foreign exchange backlogs, fulfilling a commitment made by Governor Olayemi Cardoso to address inherited claims amounting to $7 billion. This move involved the payment of $1.5 billion to settle obligations to bank customers, clearing the FX backlog entirely. Governor Cardoso emphasized that clearing these backlogs was crucial for enhancing the credibility and confidence in the Nigerian economy.
As a result of these measures, the strain on the naira/dollar exchange rate has eased, with Nigeria’s external reserves experiencing growth. According to the CBN, foreign currency reserves increased by 3.62 percent to $34.37 billion as of March 12, 2024, from $33.17 billion at the start of February 2024.
In addition to these developments, there was a significant surge in Diaspora remittances, which rose by 433 percent to $1.3 billion in February, from $300 million in January.
Bayo Onanuga, the Special Adviser on Information and Strategy, advised currency traders speculating on the foreign exchange to sell their dollar holdings, predicting a further appreciation of the naira. “Currency speculators should quickly dump their stock of dollars to avoid sorrows and tears,” Onanuga cautioned, indicating a positive outlook for the naira amidst ongoing economic adjustments.
