In a positive turn of events at the Nigerian currency markets, the naira experienced modest gains at the parallel markets on Monday and maintained stability at the official exchange rate.
This came as the first business day following the suspension of former Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, by President Bola Ahmed Tinubu.
After trading at N767/$1 over the weekend, the local currency rebounded and closed at N754/$1 at the parallel markets. Market confidence in the new government’s policy direction contributed to dealers expressing optimism, resulting in the positive shift.
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Furthermore, the naira remained steady at the Investors and Exporters (I&E) Forex Window, with an exchange rate of N463.38/$1. The I&E Forex window, often referred to as the willing buyer/willing seller markets, enables banks and foreign investors to freely trade dollars at their preferred rates, provided they find interested buyers. This channel has remained the most active platform for dollar transactions in the official market in recent years.
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Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), commented on the market developments, stating that the optimistic sentiments regarding the leadership change at the CBN would continue to have a positive impact on domestic exchange rates. He observed an appreciation of the naira against the US dollar in the black market, as the naira gained more than N10/$ from a high of N767/$ on Monday morning to a low of N754/$ at the close of business on Tuesday. Gwadabe suggested that the prevailing positive sentiment would likely bolster the naira’s strength across various markets.
In other currency news, the British Pound was trading at a buying rate of N940/£1 and a selling rate of N955/£1. Analysts predicted sustained gains for the naira against the Pound in the upcoming weeks.
Market analysts acknowledged that Nigeria currently faces a challenging situation and emphasized the need for increased dollar earnings and revenue to support the naira. The World Bank recommended that Nigeria raise taxes and generate more revenue, highlighting the severity of the country’s current position, which is unprecedented in the last three decades. The bank noted a significant decline in Nigeria’s oil production in recent years, along with unstable oil prices.
Moreover, the World Bank emphasized the importance of Nigeria building an economy that serves as a net exporter of valuable goods and services to generate more dollars. They stressed the significance of prioritizing manufacturing and exports to facilitate the speedy recovery of the local currency.
