On the first trading day after the Christmas holiday, the Nigerian Naira exhibited resilience, gaining 1.52% against the US Dollar at the official market. Forex turnover witnessed an impressive 38.81% increase, reaching $127.93 million on Wednesday, December 27, 2023.
Data from the Nigeria Autonomous Foreign Exchange Market (NAFEM), the official forex trading platform, revealed the Naira closed at N872.59 to a dollar, marking a noteworthy 1.52% appreciation. This reflects a substantial N13.29 gain compared to the previous week’s closing rate of N885.88.
During the trading session, the Naira experienced an intraday high at N1235.65/$1, while the intraday low was recorded at N740/$1, indicating a substantial spread of N495.65/$1.
The NAFEM data also highlights a robust forex turnover of $127.93 million at the close of the trading day, representing a significant uptick compared to the previous day’s figures.
Despite the positive trends in the official forex market, the parallel market witnessed a marginal decline in the Naira’s value. Unofficial forex trading quoted an exchange rate of N1233/$1, reflecting a 0.24% decrease from the previous day. Peer-to-peer traders quoted rates around N1197.60/$1.
The Central Bank of Nigeria (CBN) disclosed that it has made tranche payments to 31 banks, addressing the backlog of foreign exchange forward obligations. The apex bank further outlined the implementation of foreign exchange frameworks to tackle lingering FX issues.
Financial experts weigh in on the situation, with Mr. Olatunde Amolegbe, the former President and Chairman of the governing council of the Chartered Institute of Stockbrokers, emphasizing the importance of market and participant confidence for exchange rate stability. He noted the positive impact of clearing FX commitment backs on market confidence, highlighting the need for sustained efforts in effecting structural changes to encourage import substitution, improve security, enhance infrastructure, attract foreign direct investments, and promote local production.
Bismarck Rewane, the Managing Director/CEO of Financial Derivatives Company Limited, expressed concerns about the Naira’s volatility due to lingering forex supply issues. He pointed out the likelihood of speculative buying and an increasing number of market participants taking long positions on the dollar while shorting the Naira, given the scarcity of the dollar in the market.
Photo ( The Fintech Times )
Delino Gayweh
Serrari Financial Analyst
December 27, 2023
