Thelma Osatohanmwen
In a significant turn of events, Nigerian naira has experienced a remarkable appreciation against the US dollar on Friday, November 10, 2023, reaching a new monthly high of N780.14/$1 at the official market.
This surge in value, amounting to a 27.77% increase, came as a relief to many analysts who anticipated positive outcomes from the Central Bank of Nigeria’s (CBN) recent efforts to clear some of its foreign exchange (FX) backlog.
At the close of business on Friday, the naira’s official market rate displayed a notable gain compared to its previous standing at N996.75/$1. The intraday high touched N1096.17/$1, while the intraday low was N700.00/$1, indicating a considerable spread of N396.17/$1. Forex turnover at the official NAFEM window stood at $84.02 million, reflecting a 63.24% decline from the previous day.
However, the naira faced a contrasting situation at the parallel forex market, where it depreciated by 3.54%, quoted at N1130/$1. Peer-to-peer traders, on the other hand, quoted around N1100/$1.
The surge in the naira’s value follows the CBN’s announcement that it has initiated the clearance of the backlog of foreign exchange forward contracts. This move is anticipated to bring relief to the naira, the business community, and the broader economy. The chronic dollar shortages in Nigeria, exacerbated by foreign investors’ exit during a period of low oil prices, have led to challenges in meeting the demand for dollars.
The minister of finance, Wale Edun, announced on October 23 that Nigeria expected $10 billion of inflows to enhance FX market liquidity. The CBN’s recent actions signal a positive development for local lenders, who have struggled to meet customer demands due to persistent dollar shortages in Africa’s largest economy.
Toye Folosho, a director at the Manufacturers Association of Nigeria, highlighted the positive impact on the manufacturing sector, emphasizing that the CBN’s move would aid in procuring raw materials and machinery. Gabriel Idahosa, deputy president of the Lagos Chamber of Commerce and Industry, expressed optimism about the broader market, stating that the CBN’s actions would restore confidence and potentially attract foreign direct investments.
