Following the Easter holiday, foreign exchange (FX) trading resumed on Tuesday with the Naira showing signs of strength, reaching 1,238.3 as Bureau De Change (BDC) operators bought at N1,220 per dollar, and sold to customers at N1,265/$1.
The Naira’s appreciation continued on the parallel market, rising to 1,225 per dollar, marking a 1.99 percent increase from last week’s closing rate of N1,280.
This positive trend in the Naira’s value was attributed to the Central Bank of Nigeria (CBN)’s effort to clear all verified FX backlogs, amounting to the final tranche of $1.5 billion. As a result, the Naira’s month-on-month appreciation of 21.8 percent in March 2024 is expected to persist in April, bolstered by the CBN’s policy measures.
A report by Afrinvest Securities Limited highlighted the Naira’s strengthening by 21.8 percent month-on-month against the base currency, USD, projecting further improvements in April.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, the Naira is forecasted to exchange at N1,309.39/$1.00 for the concluded month.
Additionally, in the parallel market, the Naira witnessed a 19.6 percent month-on-month gain against the USD, closing at N1,300.00/$1.00. Meanwhile, the daily average turnover in the NAFEM segment rose by 8.7 percent month-on-month to $857.8 million by March 28, 2024.
Looking ahead, analysts anticipate the Naira to trade within a similar band in April, as the CBN continues its efforts to manage liquidity and attract capital inflows through increased Open Market Operations (OMO) sales, prompted by the recent Monetary Policy Rate (MPR) hike to 24.75 percent.
Aminu Gwadabe, President of the Association of Bureaux de Change Operators of Nigeria (ABCON), attributed the improved dollar liquidity at the retail end of the forex market to various factors, including monetary policy tightening, clearance of forex backlog forward commitments, and the recall of BDCs.
