The naira surged to N1,570/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window on Thursday, marking an increase of 2.47% from the previous day’s rate of N1,608.73/$1.
This is the highest one-day increase since July 22, 2024, when the Central Bank of Nigeria (CBN) decided to resume selling foreign exchange (FX) to authorized dealers.
According to data from the FMDQ, the local currency has closed below the N1,600 ceiling, which it crossed about a week ago.
The naira traded at a low of N1,551 and a high of N1,631, still showing signs of volatility.
However, it is gradually recovering from the significant loss recorded last week, snapping a six-day losing streak on Wednesday when it appreciated by 0.77%.
FX turnover falls
While the local currency seems to be on a recovery path, FX turnover appears to be unstable. While it rose by 62.81% on Wednesday to $270.81 million, it crashed on Thursday, August 1, 2024.
Nigeria’s FX turnover fell by 47.45% to $142.32 million, likely suggesting either low trading activity or a low supply of dollars on the official market.
This is as Nigerians embarked on a 10-day protest against hunger and bad governance.
What you should know
Last week, the Central Bank of Nigeria (CBN) sold a cumulative amount of $148 million to authorized dealers. The foreign exchange was sold to 29 Authorized Dealer banks at exchange rates ranging between N1,470.00$1 and N1,510.00/$1. It was the third to authorise FX dealers in July as the CBN tried to boost liquidity in the FX market.
The apex bank earlier announced the sale of $106.5 million as foreign exchange (FX) to 29 FX dealer banks.
In a statement signed by Dr Omolara Omotunde Duke, Director, Financial Markets Department, it was disclosed that on July 18 and 19, 2024, the CBN sold $106.5 million to 29 authorized dealer banks at exchange rates ranging from N1,498/$1 to N1,530.00/$1 and bought $9.5 million from four authorized dealer banks at rates between N1,510/$1 and N1,550/$1.
The central bank also stated that it had sold $122.67 million to 46 authorized dealers two weeks ago.
The CBN also announced the approval of the sales of FX to eligible BDCs to meet the demand for invisible transactions in a decisive step to strengthen the naira on Thursday, July 18, 2024.
The bank announced that the sum of $20,000 is to be sold to each BDC at the rate of N1,450/$1. This rate represents the lower band of the trading rate at the NAFEM from the previous trading day.
These sales from the CBN came at a time when the naira faced severe demand pressure.
