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On the first trading day after the Christmas holiday, the Nigerian Naira gained against the dollar, appreciating by 1.52% to close at N872.59 to a dollar at the official market. This represents a N13.29 gain compared to the N885.88 closed on the previous Friday. Forex turnover at the official NAFEM market increased by 38.81% to $127.93 million.
- Intraday High and Low: The intraday high recorded was N1235.65/$1, while the intraday low was N740/$1, indicating a wide spread of N495.65/$1.
- Parallel Forex Market: At the unofficial parallel forex market, the exchange rate quoted was N1233/$1, representing a 0.24% decline from the previous day’s close. Peer-to-peer traders quoted around N1197.60/$1.
- CBN Actions: The Central Bank of Nigeria (CBN) has made tranche payments to 31 banks to clear the backlog of foreign exchange forward obligations and has established foreign exchange frameworks to address FX issues.
Expert Perspectives:
- Mr. Olatunde Amolegbe, Former President and Chairman Governing Council of the Chartered Institute of Stockbrokers, emphasized the importance of confidence for a stable exchange rate. He sees the decision to clear FX commitments as positive for market confidence, but its impact may manifest in the medium term.
- Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, predicts naira volatility due to lingering forex supply concerns. The scarcity of dollars may lead to continued speculative buying, with more market participants taking long positions on the dollar and shorting the naira.
As the forex market continues to evolve, experts highlight the need for structural changes, including improved security, better infrastructure, increased foreign direct investments, and support for local production to encourage stability and reduce dependence on forex speculation.
