Nigeria’s currency, the Naira, appreciated against the US dollar at the parallel market on Wednesday in the early hours of trading at the parallel market, to trade at an average rate of N755/$1, representing a gain of 1.82% compared to the N769/$1 it exchanged at when trading closed the previous day.
Some Bureau De Change (BDC) FX dealers spoken with by our correspondent linked the appreciation of the local currency’s exchange rate against the foreign currencies, particularly the US dollar, to improving confidence of investors in the economy following ongoing plans by the new administration to end abuses in the key sectors.
The Naira also appreciated against the British Pound Sterling by 0.63% during the day’s trading session, trading at an average exchange rate of N946/£1, compared to the N952/£1 it traded in the preceding day’s session.
The local currency also appreciated by 0.62% against the Euro and traded at an average exchange rate of N805/€1 compared to the N810/€1 it traded on Tuesday.
However, data from a P2P exchange platform indicated that at the cryptocurrency P2P Exchange market, the Naira slightly depreciated, trading at a minimum of N763.20/$1 on Wednesday, representing 0.79% decrease from the N757.20/$1 it exchanged at during the previous day’s trading session.
As part of its monetary efforts to achieve exchange rate stability for the local currency against other foreign currencies, the Central Bank of Nigeria (CBN) has been supplying FX to the official and unofficial markets over the past years.
However, the apex bank discontinued FX supply to the parallel market early in March 2020 following its findings that some FX dealers were abusing the privilege by engaging in FX round-tripping.
The CBN has not reversed the decision on discontinuation of FX intervention at the unofficial market and analysts believe that this is partly responsible for the huge disparities in the local currency’s FX rate in the official and parallel markets.
Even then, there are strong indications that the FX exchange rate disparity in the official and black markets may soon be over as the new President, Bola Ahmed Tinubu, had in his inaugural address to the nation on Monday, May 29, expressed his desire to make the CBN adopt a unified FX exchange rate for the national currency.
