On December 18, 2023, the Naira experienced an intraday high, reaching N1249/$1, showcasing a marginal gain against the US dollar. This upward movement was observed in both the official and black markets.
According to data from the NAFEM (Nigeria Autonomous Foreign Exchange Market), the official market recorded a 0.17% appreciation, closing at N888.35 to a dollar. This signifies a N1.51 gain, marking a 0.17% increase compared to the N889.86 closure on the preceding Friday.
The intraday trading range displayed substantial volatility, with the high reaching N1249/$1 and the low touching N720/$1, reflecting a notable spread of N529/$1.
At the close of trading, the official NAFEM window reported a forex turnover of $137.82 million, indicating a remarkable 230.82% surge compared to the previous day.
In the unofficial parallel forex market, the Naira also witnessed a marginal gain, with the exchange rate quoted at N1235/$1, marking a 0.81% increase over the previous day’s closing rate. Peer-to-peer traders, on the other hand, quoted around N1214.10/$1.
The Central Bank of Nigeria (CBN) shared that it made tranche payments to 31 banks to address the backlog of foreign exchange forward obligations. The apex bank also disclosed the implementation of foreign exchange frameworks to tackle FX challenges.
Financial experts, including Mr. Olatunde Amolegbe, former President and Chairman of the Chartered Institute of Stockbrokers, and Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, weighed in on the situation. Amolegbe emphasized the importance of market and participant confidence for exchange rate stability, while Rewane predicted continued naira volatility due to lingering forex supply concerns.
Efforts to stabilize the currency include clearing FX commitments and utilizing monetary policy tools to reduce system liquidity. Structural changes, such as enhanced security, improved infrastructure, increased foreign direct investments, and encouragement of local production, are seen as crucial for sustained positive impact.
