BLOOMBERG
Nigeria’s naira jumped against the dollar on the parallel market and on crypto exchanges on Friday, a day after authorities said they took steps to clear a backlog of matured foreign-currency forward contracts that have hampered dollar inflows.
The local currency soared 10% to 1,035 a dollar on the parallel market, according to Abubakar Mohammed, chief executive officer of Forward Marketing Bureau de Change Ltd., which compiles exchange-rate data. It was quoted at 819.10 on Binance Holdings Ltd.’s platform, a 28% gain from the previous day, as of 2:15 p.m. local time.
The appreciation comes after the central bank signaled it’s clearing a $6.7 billion backlog of matured forward transactions. Movements in the naira on the crypto market are often an early indication of how the currency will trade on the streets of the West African nation’s cities.
Read More: Nigerian Central Bank Clears Matured FX Forwards With Some Banks
Many Nigerians buy cryptocurrencies on Binance, despite restrictions by the government, with the aim of hedging against inflation that’s accelerating at the fastest pace in two decades. The exchange rate on Binance reflects conditions on the parallel market, where the forces of demand and supply determine the rate. At the official market, authorities hold more sway over pricing.
The announcement by the Central Bank of Nigeria on Thursday that it cleared the matured foreign-currency contracts for some lenders prompted some speculators to offer their dollars for sale, boosting supply, Mohammed said.
The backlog was a significant challenge that the central bank has been “battling with in the last three and four years; there is no way this will not prop up the value of the naira,” he said.
