NAIRA SURGES BY 4.49% IN ONE WEEK DUE TO CENTRAL BANK’S POLICY INTERVENTION.

 

The Nigerian naira has experienced a notable increase of 4.49 percent against the dollar within a seven-day trading period, propelled by the Central Bank of Nigeria's (CBN) policy interventions.

Data from the Financial Markets Dealers Quotations (FMDQ) revealed that the naira appreciated to N1,418.78 per dollar, marking a significant rise from its peak of N1,482.57 on January 30, 2023, at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

On a daily basis, the naira exhibited a gain of 1.06 percent, with the dollar quoted at N1,418.78 on Wednesday compared to N1,433.89 on Tuesday at the official market.

However, at the black market, also known as the parallel market, the naira experienced a slight weakening by N10, with the dollar trading at N1,490 on Wednesday as opposed to N1,480 on Tuesday. This data was collated from various street trading platforms.

Addressing the House of Representatives during sectoral debates, Yemi Cardoso, the CBN governor, acknowledged the increased demand pressures in the Nigerian foreign exchange market. He attributed this trend to speculative forex demand, inadequate forex supply resulting from the non-remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.

Cardoso highlighted the CBN's efforts to address exchange rate volatility, including initiatives to enhance liquidity in the FX markets, unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau de Change (BDCs), enforcing the Net Open Position limit, and adjusting the remunerable Standing Deposit Facility cap.

He emphasized that the exchange rate is determined by the dynamics of supply and demand, underscoring the importance of addressing both factors to stabilize the exchange rate. Cardoso cited the surge in the demand for US Dollars, particularly attributed to the increasing number of Nigerian students studying abroad, as a significant factor influencing exchange rate dynamics.

In conclusion, Cardoso reaffirmed the CBN's commitment to refocusing on price stability and building confidence in the Nigerian economy through stability in consumer prices and the foreign exchange market.