In a surprising turn of events, the Nigerian naira experiences a significant resurgence against the dollar on Friday, November 24, 2023, closing at an impressive N794.89/$1 at the official market.
This substantial gain of 20.31% comes as a relief for many analysts who anticipated a positive impact from the Central Bank of Nigeria’s recent move to clear some of its foreign exchange (FX) backlog, boosting confidence in the national currency.
The data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), where forex is officially traded, indicates the naira’s appreciation from N956.33 to N794.89 against the dollar. This reflects a noteworthy N161.44 gain or a 20.31% increase.
Throughout the trading day, the naira recorded an intraday high of N1136/$1 and an intraday low of N700.00/$1, presenting a substantial spread of N436/$1. The forex turnover at the close of trading amounted to $75.82 million, revealing a 28.13% decline compared to the previous day.
Simultaneously, the naira strengthened in the parallel forex market, where unofficial forex transactions occur. The exchange rate appreciated by 0.87%, standing at N1155/$1, with peer-to-peer traders quoting around N1151.22/$1.
Financial analysts weigh in on this development, emphasizing the critical role of market and participant confidence in maintaining exchange rate stability. Olatunde Amolegbe, the former President and Chairman of the Chartered Institute of Stockbrokers, underscores the importance of structural changes, including improved security, better infrastructure, increased foreign direct investments, and encouragement of local production, to support a more robust and stable currency.
Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, anticipates continued volatility in the naira due to lingering forex supply concerns, leading to speculative buying and an increase in long positions on the dollar while shorting the naira.
