In an impressive surge against the US dollar, the Nigerian Naira is nearing a significant threshold at the parallel market, with predictions of it falling below 1,000/$ before week’s end. This development follows a robust resurgence in the official market, where the Naira appreciated to N1,136/$, marking a 6.1 percent increase from the previous trading session.
Strong Gains Across Markets
At the close of trading activities on Monday, the naira stood strong at N1,050/$ in the parallel market, showing significant recovery and resilience. Traders and analysts are optimistic, forecasting further strengthening of the currency in the coming days. The official foreign exchange market, managed by the FMDQ Exchange, reported an intra-day high of N1,227 per dollar, improving from N1,265 per dollar on Friday, with the intra-day low appreciating notably to N1,000 from N1,100.
Central Bank’s Strategic Moves
The Central Bank of Nigeria’s (CBN) recent foreign exchange directives have played a crucial role in stabilizing and strengthening the Naira. Last month, the CBN successfully resolved all valid foreign exchange backlogs, addressing inherited claims that totaled $7 billion. Additionally, the total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) surged by 41.7 percent to $3.75 billion, marking the highest level since March 2019.
The CBN also revised the exchange rate for Bureau De Change operators to N1,101 per dollar, planning to distribute $15.88 million among 1,588 eligible operators. This revision, coupled with a significant increase in the benchmark interest rate to 24.75 percent, forms part of the measures to control inflation and stabilize the national currency.
Challenges at the Unofficial Market
While the official rates show promising improvements, currency traders at the popular Wuse Zone 4 market in Abuja have expressed concerns over the current rates, indicating that the business is becoming less profitable. Malam Ibrahim, a trader, noted that he purchased dollars at rates between N950 and N980 and sold them between N1,010 and N1,020. However, low demand has pushed the buying price below N1,000, complicating the profit margins for traders.
Global Recognition and Future Projections
The Naira’s robust performance has not gone unnoticed on the global stage. Last week, investment giant Goldman Sachs Group highlighted the Naira as the top-performing currency globally in April. The firm also adjusted its projections, now expecting the Naira to strengthen beyond the previously forecasted N1,200/$ mark, thanks to the aggressive monetary policy measures implemented by the CBN.
As the Naira approaches this critical threshold, the outlook remains positive, with market participants closely monitoring the impact of continued policy management by the Central Bank of Nigeria on the currency’s trajectory.
