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The Nigerian naira exhibited a rebound against the United States dollar in the parallel market, concluding at 850/dollar on Wednesday (August 16, 2023). This recovery followed the announcement of the Central Bank of Nigeria’s intended intervention in the foreign exchange market a couple of days ago.
Just a few days prior, the naira had been trading around 950/dollar in the parallel market. It then made further gains, closing at 915/dollar on Tuesday.
Alh Taofeek Ahmed, a Bureau de Change operator, stated, “Today, we conducted trades at 830/$ for buying and 850/$ for selling. Demand was lower compared to last week.”
At the Lagos airport, another BDC operator, Alhaji Mustapha Umar, reported the sale and purchase of the greenback at 850/dollar and 835/dollar, respectively.
Meanwhile, Aminu Zakari, a BDC operator operating in the Abuja Central Business District, indicated that he bought and sold the dollar at 860/dollar and 845/dollar.
Zakari highlighted the uncertainty that had emerged in the parallel market after the CBN’s announcement and mentioned that operators were awaiting the central bank’s proposed intervention.
At the Investor & Exporter forex window, trading began at N781.66/$, peaked at N799.90/$, and finally closed at N759.86/$ on Wednesday, whereas it had closed at N781.30/$ the previous day.
In the wake of briefing President Bola Tinubu about the measures taken to curb the naira’s decline, the Acting Governor of the CBN, Folashodun Shonubi, assured Nigerians of the bank’s commitment to enhancing liquidity and achieving stability in the market, which includes addressing issues in the parallel market. He noted that fluctuations in the parallel market weren’t solely influenced by economic factors but also speculative demand.
A confidential source from an investment bank mentioned that following the CBN’s announcement, market speculators had grown cautious. Additionally, there has been a trend of Nigerians abroad investing in Eurobonds. Some analysts believe this may influence people with dollar income to retain their holdings in dollars rather than converting them to naira.
In an effort to stabilize the naira, the Nigerian National Petroleum Limited secured a $3 billion emergency loan on Wednesday. However, opinions among analysts remain divided on whether this amount will be sufficient to achieve currency stability.
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