The Naira appreciated against the US dollar in exchange rate to trade at an average of N738/$1 at the black market on Monday, representing improvement in its exchange value by 0.94%, from the N745/$1 it traded last week Friday.
Similarly, the local currency also strengthened its exchange rate for the Pound Sterling to trade at an average of N933/£1 in the opening day of the week, representing a 0.21% improvement from the N935/£1 it exchanged at in the last trading session.
The Naira also appreciated against the Euro by 0.25% to trade at N808/€1 compared to N810/€1 it traded last week Friday.
The Naira opened the market this year at an exchange value of N736/$1 and recorded the highest depreciation rate at N775/$1 on 20th February while its lowest exchange value stood at N730/$1 on 5th January this year.
The Central Bank of Nigeria (CBN) has, over the past years, been supplying dollars to FX traders at the parallel and official window markets to stabilize the local currency’s exchange rate against major foreign currencies.
However, due to issues related to FX round tripping among the BDC dealers, the apex bank ended FX supply to the operators sometime in year 2020 to avoid further abuses of its interventions in the FX market.
The CBN announced the suspension of the sale to BDCs in a letter dated March 25, 2020, addressed to the President of the Association of Bureau De Change of Nigeria (ABCON), Alhaji Aminu Gwadabe.
The association had earlier on March 24 formally advised the apex bank to suspend the weekly sale of FX to the BDCs.
Financial analysts believe that the apex bank’s interventions at the I&E window was affecting the foreign reserves’ accruals but the benefits of the CBN’s monetary policy action on the FX market cannot be over-emphasized in view of the job creation and other value addition parameters.
The experts also linked the nation’s weak foreign reserves position to other factors, including the changing pattern of foreign trade, particularly as it relates to the global supply chain in recent months, institutional changes in the economy and structural shifts in production, amongst others.
