The Nigerian naira trended positively against the dominant foreign currency, the US dollar, across forex markets due to efforts by the Central Bank to stabilise the sovereign currency. Even after an early devaluation in 2024 to bring official and black market rates into line, the naira still experienced substantial losses.<<<<READ FULL CONTENT
The official spot rate for the naira is quoted on the FMDQ Securities Exchange, and as of Friday, the rate was N1431.40 per US dollar. At the parallel market, the exchange rate settled below N1400, according to channel checks.
Currency manipulations plunged the market into the dark earlier in the year. In an unofficial market, the US dollar was worth up to N1900 as FX whales manipulated the direction of FX rates in an attempt to profit from a wider spread—the difference between official and parallel market rates.
Without leaving no stone unturned over speculative activities, Nigeria’s apex bank has used regulation to clip FX whales’ ability to fly new kites in the parallel market.
By closing gaps in the banking industry, bureau de Change operators (BDCs), and dark economy—which is aided by the peer-to-peer Binance cryptocurrency trading platform—the CBN is stepping up its intervention to stabilize the naira.
The monetary authority also raised yields on naira-denominated assets to attract both domestic and international investors and curb currency speculation.
The top bank declared last week that FX backlogs have been resolved. In an official statement, the CBN said the authority has successfully cleared all valid foreign exchange backlogs. After claiming that USD2.40 billion of the USD7.00 billion was deemed invalid, the valid FX backlog paid came to USD4.60 billion.
The reversed decision to stop US dollar sales in 2021. Circumstances, however, rendered it impracticable to maintain its position regarding BDC operators that had previously been de-recognized when FX whales assumed control of trading activities and exerted an excessive amount of influence over the exchange rate.
Since CBN re-commenced the sale of US dollars to the BDCs on February 27, the exchange rate has been trending positive against the US dollar. The apex bank also recommenced retail sales of US dollars to banks in the range of N1,300– N1,400.
Foreign Portfolio Investors (FPIs) are now able to make larger inflows into the foreign exchange market thanks to the recent changes and increased involvement in the market. These developments have also given investors more confidence. We note the renewed interest from foreign portfolio investors in the fixed-income market as stop rates on the long-end bills rose above 20.0%,” analysts said in a commentary note.
BREAKING: CBN Crashes Dollar To N1,269/$ At Black Market With $10,000 Sale To BDCs
According to data on the CBN website, Nigeria’s gross external reserves increased by 4.16% to reach an eight-month high of USD34.38 billion. The surge is primarily due to increased inflows from foreign investors and higher remittances. Remittances from the diaspora worth USD 1.30 billion were recorded in February, according to the CBN.
Meanwhile, Broadstreet analysts acknowledged the stability of the naira in the forex market over the past few weeks, attributing it to recent reforms and improved forex liquidity.
Analysts stated that they expect the central bank to continue its reforms and its involvement in the foreign exchange market to maintain the stability of the naira, even with the payment of the foreign exchange backlog. #Naira Upbeats All Fronts as CBN Humbles FX Whales
Naira Steadies as Banks Issue Update on FX Purchase
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