Naira Gains Ground Against the Dollar and Other Currencies

Last week, the naira made gains against the dollar and other foreign currencies in the official market, although pressure from the parallel market remains. This recovery has been somewhat supported by foreign exchange sales to banks and licensed dealers, but it hasn’t been enough to stabilize the naira, especially as the Central Bank of Nigeria (CBN) continues to intervene in the forex market at a reduced level....CONTINUE READING>>>

According to MarketForces Africa, high demand during the August retail Dutch forex auction has prompted the CBN to reconsider its approach. An expert mentioned that the country cannot rely on the $1.1 billion in forex sales from the last auction, suggesting that this may be the final auction in its current form, as the CBN has not provided clarity on future actions.

The CBN has been selling US dollars to banks amidst a persistent scarcity in the parallel market for various transactions. This shortage of dollars has also affected the official market, contributing to the naira’s instability over the past few weeks.Analysts from Broadstreet warned of a challenging outlook for the naira, citing inconsistent forex policies. They noted that it remains uncertain whether the naira has stabilized, as the CBN seems to only conduct forex sales when the naira exceeds the N1600 mark.

Interestingly, the CBN sold dollars to banks at N1630, indicating a new acceptance of that rate despite the ongoing rise in external reserves.In the official market, the naira appreciated by 0.52%, closing at N1,666.72 per US dollar. In the parallel market, it ended at ₦1,730 to the dollar. Data from the FMDQ Exchange, which manages the Nigerian Autonomous Foreign Exchange Market (NAFEM), showed that the naira gained N8.77 compared to the previous trading day, where it was valued at N1,675.49 to the dollar.