Since the start of August, the naira has continued to rise while holding onto its gains amid weak buying pressures of the greenback in Nigeria’s black market.
A few days after security personnel stormed a Bureaux De Change (BDC) hub in Abuja, the naira continued to strengthen on the black-market Wednesday, strengthening to N660 per dollar.
Recall that at the parallel market last week, the naira traded at N710 to the dollar. This also demonstrated the naira’s increase of N50 to the dollar in a matter of days.
Since Monday, August 1, the Naira has strengthened against the US Dollar significantly more easily in all facets of the foreign exchange (FX) market. There has been a relative relief for the Naira against the US Dollar across all segments of the foreign currency (FX) market after it faced challenges in July due to demand for the dollar which was spiked by panic buying over devaluation concerns.
The Nigerian currency strengthened on the official market by 0.03% to settle at N428.88 to the dollar on Monday, according to data on FMDQ OTC.
What the CBN is saying
- In order to ensure stability, the Central Bank of Nigeria (CBN) frequently intervenes in the official foreign exchange market.
- The CBN’s spokeswoman, Osita Nwasinobi, stated last week that the central bank would continue to take decisive steps in the forex market to prevent future declines in the value of the naira.
- In order to prevent the naira from falling much further, he warned forex purchasers not to fall prey to the speculative practices of some participants in the FX market.
Mounting pressure on the Naira
Although there are local and global viewpoints on the pressure on the naira, the demand for foreign exchange for goods and services has remained constant, posing a demanding challenge.
In addition to damaging investor confidence and reducing forex inflows into Nigeria, the country’s deteriorating security situation also damaged the economy by driving up the price of gasoline subsidies and increasing oil theft.
The apex bank reaffirmed its commitment to continuing to reform the forex market and pursuing all measures aimed at sanitizing the market to increase transparency and ensure proper operation in order to get rid of illicit currency traders from the economy.
