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Currency traders have been analyzing the recent appreciation of the Nigerian Naira against the US Dollar.
According to data from FMDQ Securities, the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closed below the N1,300 ceiling for the first time since January 26th of this year.
The Naira depreciated to as low as N1,615/$1 on March 13, 2024.
However, since the Central Bank introduced various forex policies in March, the Naira has gained over 21 percent against the Dollar.
Currency traders who spoke to Punch attributed the Naira’s appreciation to a decrease in demand for the Dollar and the Central Bank’s decision to sell foreign exchange to operators.
Analysts at Afrinvest also predicted that the Naira would continue to trade within a similar band in April as the Central Bank continues its efforts to mop up liquidity and attract more capital.
Traders in the market have noticed a significant drop in the demand for Dollars, leading to the appreciation of the Naira.
The Central Bank’s direct sale of foreign exchange to traders has also contributed to the positive trading activities.
Malam Yunusa, another trader, believes that the Naira will maintain its gain against the Dollar, as operators in the market are also interested in the Naira’s growth.
The reactivation of Bureaux de Change (BDCs) has notably enhanced dollar liquidity in the retail segment of the forex market.
This, coupled with the tightening of monetary policy, increased investment in government instruments, and the clearance of $7 billion forex backlog forward commitments, has further supported the appreciation of the Naira.
This article was updated 1 month ago
