On Wednesday, the official exchange rate between the Naira and the Dollar closed at N1,300/$1 on the official Nigerian Autonomous Foreign Exchange Market (NAFEM) window, marking its strongest performance in over 8 weeks.
This significant development is based on data obtained from the Financial Markets Dealers Quotations (FMDQ), which officially quotes exchange rates.
Findings from Nairametrics indicate that the exchange rate in the parallel market also strengthened, ranging between N1,250 and N1,300 for both cash and inflow-related transfers.
Key insights from the data include:
– The FMDQ reported a closing exchange rate of N1,300.43 on Wednesday, marking the strongest performance since January 26, 2024, when the exchange rate closed at N891.9/$1.
– The intra-day high reached approximately N1,460/$1, representing the highest quotes for trade between the Naira and the Dollar, while the intra-day low was quoted at N1,200/$1, providing an indication of potential settlement levels in the coming days.
– A total turnover of $416 million was recorded for the day, marking the largest forex volume since February 6, when $465 million was reported.
– Nairametrics’ analysis suggests that approximately $946 million has been recorded as turnover this week, and about $3.7 billion this month, compared to February’s turnover of about $4.67 billion.
The strengthening of the Naira can be attributed to various monetary policies implemented by the Central Bank, including higher interest rates for Open Market Operations (OMO) bills and Treasury bills. The latest Treasury bills attracted an interest rate of 21.5%, with over N1.5 trillion allocated, indicating a focus on combating inflation and attracting dollar inflows.
Furthermore, the CBN’s revamped forex policies, allowing the exchange rate to be determined by the market and resuming the sale of forex to Bureau De Change (BDC) operators, have contributed to the Naira’s strength. The apex bank sold $10,000 to BDC operators at an exchange rate of N1,251/$1. Additionally, the exchange rate used for customs import duties and cargo clearance has decreased for the fifth time in less than two weeks, further supporting the Naira’s upward trajectory.
