Naira begins week with depreciation
Currency traders have shared their thoughts on why the Naira has been appreciating against the Dollar over the past few weeks.
According to data from FMDQ Securities, the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closing below the N1,300 ceiling marks the first instance since January 26 of this year.
The Naira depreciated to as low as N1,615/$1 on March 13, 2024.
Since the central bank introduced a slew of forex policies in March, the Naira has gained over 21 percent against the Dollar.
Currency traders who spoke to Punch, attributed the naira appreciation to waned demand for the greenback note and the decision of the apex bank to sell foreign exchange to operators.
Analysts at Afrinvest also predicted that the Naira would trade within the similar band in the month of April as the CBN continues its activities to mop up liquidity and attract more capital.
A BDC operator at Wuse Zone 4, Ibrahim Yahu, stated, “The demand for dollars has really gone down and the Naira is appreciating because of the new rate determined by the CBN for traders.
“The CBN initially started selling to us at N1,251 but they gave another rate last week Thursday at N1,190 and that is the reason for new fresh drop of the Dollar. The CBN selling directly to us has really helped trading activities.”
Another trader, Malam Yunusa, stated that the Naira was poised to maintain its gain against the Dollar adding that operators also want the Naira to grow.
The President of the Association of Bureaux de Change Operators of Nigeria, Aminu Gwadabe, recently noted that apart from the tightening of monetary policy resulting in interest rate hikes, increased investment in government instruments, and the clearance of $7 billion forex backlog forward commitments, the reactivation of the BDCs has notably enhanced dollar liquidity in the retail segment of the forex market.
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