After swooping on speculators, hoarders, naira appreciates in official market

Few days after the Central Bank of Nigeria (CBN) threatened to clamp down on speculators and hoarders, the naira appreciated by 27.77 percent at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

NAFEM is the market trading segment for Investors, Exporters and end-users where forex is officially traded.

It was gathered that the naira appreciated massively against the dollar on Friday, 10th November 2023, closing at a new monthly high of N780.14/$1 at the official market.

This represents an N216.61 gain in the local currency compared to the N996.75 it closed on Thursday and a new all-time high. The last all-time high was N776.14 recorded on November 3rd.

The intraday high recorded was N1096.17/$1, while the intraday low was N700.00/$1, representing a wide spread of N396.17/$1.

The data obtained from the official NAFEM window showed that forex turnover at the close of the trading was $84.02 million, representing a 63.24% decline compared to the previous day.

However, the naira weakened at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 3.54%, quoted at N1130/$1, while peer-to-peer traders quoted around N1100/$1.

The CBN last week said it has begun to clear the backlog of foreign exchange forward contracts a move that is expected to bring relief to the naira, the business community, and the economy at large.

The central bank’s payments follow the October 23 announcement by Wale Edun, the finance minister, that Nigeria was expecting $10 billion of inflows to improve FX market liquidity.

It will come as a relief to local lenders, who have been struggling to meet demands from customers due to chronic dollar shortages in Africa’s largest economy.

A director at the Manufacturers Association of Nigeria (MAN), Toye Folosho, said CBN’s clearing of the backlog is a good one for the manufacturing sector because a lot of manufacturers have not been able to procure their raw materials and machinery.

“The new move by CBN to clear backlogs with international lenders gives the signal that the apex bank is back in trading and business,” Gabriel Idahosa, deputy president of Lagos Chamber of Commerce and Industry, said.

“Apart from bringing back letters of credit, it generally brings back confidence in the traditional market. It restores the confidence of portfolio investors and international airlines. It will also bring foreign direct investments,” he added.