Nigerian naira improves to N1,382/$ after $7bn FX settlement
The Nigerian currency continued on a recovery note on Thursday with naira appreciating significantly against the dollar on the strength of recent interventions by the Central Bank of Nigeria (CBN).
From N1,536.83 in the previous day, the naira appreciated to N1,382.35/$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the first time in a long while that the local currency would record such a massive gain.
This was coming 24 hours after the Central Bank of Nigeria (CBN) announced it had cleared $7bn valid foreign exchange claims while increasing the country’s forex reserves.
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CBN’s acting director of corporate communications, Hakama Sidi-Ali, announced this in a statement on Wednesday.
The statement partly reads, “The Central Bank of Nigeria has announced that all valid foreign exchange backlogs have now been settled, fulfilling a key pledge of the CBN Governor, Olayemi Cardoso, to process an inherited backlog of $7bn in claims.
“Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.
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Stability noticed
Apart from the massive gain recorded at the official market, the local currency also stabilised on Thursday at the parallel market exchanging at N1,500 to a dollar, according to checks by our correspondents in Lagos, Abuja and Kano.
In Lagos, the dollar was traded at N1,500 to N1,520 yesterday with the operators confirming relative stability in the market.
There are expectations that the naira will continue to appreciate against the dollars in days to come, making it necessary for those who are hoarding dollars to bring them out.
In Abuja, a cross section of Bureau de Change operators in Wuse said the dollar has been falling against the naira since the beginning of the week.
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In Kano, BDC operators said the naira has been seeing gradual gain.
CBN doing well?
Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf was quoted by Daily Trust to have said “One of the ways to get out of this challenge is also to clear the backlogs so that gradually that would help to restore confidence and once confidence is restored, the speculative component of the pressure in the foreign exchange market will begin to diminish.
“This is because there are real demands and there are also speculative demands. So once the speculative components reduce drastically, we should begin to see some impact in terms of stability and in terms of appreciation of the currency.”
He however stated that it would take some time for the challenge to fizzle away because of the “fundamental” problem of inadequate forex supply which can be addressed when the country jacks up its oil output and attracts more foreign direct investments (FDIs).
