The exchange rate between the Naira and the Dollar closed at N1,300/$1 on Wednesday on the official NAFEM window, marking the strongest performance in over 8 weeks.
This information comes from data obtained from the FMDQ, where the exchange rate is officially quoted.
Nairametrics’ findings also indicate that the exchange rate in the parallel market strengthened, ranging between N1,250 and N1,300 for both cash and inflow-related transfers.
What the data is saying
According to the FMDQ, the exchange rate closed at N1,300.43 on Wednesday, the strongest since January 26, 2024, when the exchange rate closed at N891.9/$1.
- The intra-day high, which represents the highest quotes for trade between the Naira and the Dollar, reached approximately N1,460/$1.
- The intra-day low was quoted at N1,200/$1, providing an insight into where the exchange rate might settle in the coming days.
- The total turnover for the day was $416 million, marking the largest forex volume recorded since February 6, when $465 million was reported.
- Nairametrics’ analysis suggests that about $946 million has been recorded as turnover this week and about $3.7 billion this month. This, however, compares to February, where about $4.67 billion was recorded as turnover.
Why the Naira is stronger
The improved exchange rate results from several monetary policies implemented by the Central Bank, headlined by higher interest rates for OMO bills and Treasury bills. Nairametrics’ findings reveal that the latest Treasury bills attracted an interest rate of 21.5%, with over N1.5 trillion allocated.
- Higher interest rates are often viewed as an indication that monetary authorities are focused on combating inflation while also attracting dollar inflows.
- Additionally, the CBN has revamped its forex policies by allowing the exchange rate to be determined by the market and resuming the sale of forex to BDCs.
- Nairametrics reported that the apex bank sold $10,000 to BDC operators at an exchange rate of N1,251/$1.
Furthermore, the exchange rate used for calculating customs import duties and cargo clearance has decreased for the fifth time in less than two weeks, shifting from N1,612 per dollar on March 15 to N1,405.46 per dollar currently.