The Nigerian naira experienced a significant surge against the US dollar, closing at N791.75/$1 in the official market on November 17, 2023.
This substantial appreciation of 6.24% brought relief to experts who anticipated a positive impact from the Central Bank of Nigeria’s (CBN) recent move to clear a portion of its foreign exchange (FX) backlog, fostering confidence in the national currency.
The naira’s gain amounted to N49.39, representing a 5.24% increase compared to the previous day’s closing rate of N841.14.
Notably, the intraday high reached N1120/$1, while the intraday low was N701/$1, reflecting a significant spread of N419/$1.
Official data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) revealed a 23.60% decline in forex turnover at the close of trading, amounting to $157.78 million.
Meanwhile, in the parallel forex market, where transactions occur unofficially, the naira experienced a marginal depreciation of 0.26%, quoted at N1140/$1. Peer-to-peer traders set the rate at approximately N1130.60/$1.
The CBN’s initiative to clear the backlog of foreign exchange forward contracts is seen as a crucial step to bring relief to the naira, local businesses, and the overall economy.
Chronic dollar shortages have persisted in Nigeria since foreign investors withdrew from local assets during a period of low oil prices.
The central bank’s recent efforts to address these challenges are expected to restore confidence in the market, benefitting local lenders and various sectors, including manufacturing, which has struggled with procurement due to the scarcity of foreign currency.
Analysts believe this move will not only attract foreign direct investments but also signal a positive shift in trading dynamics.
Source: Nairametrics