The Nigerian currency, the naira, experienced mixed performance against various foreign currencies in the parallel and official markets recently.
On Sunday, July 21, 2024, the naira traded at N2,070 to the British pound and N1,580 to the euro in the parallel market, as per Bureau de Change (BDC) operators. The rates for purchasing and selling the pound and euro were N2,020 and N2,070, and N1,650 and N1,700, respectively.
In the official market, however, the naira faced a significant decline against the US dollar on Friday, July 19, 2024, trading at N1,596 to a dollar. This marked a drop from N1,565 the previous day, as recorded by the FMDQ Exchange. The official spot rate varied, with a high of N1,619 and a low of N1,496 per dollar, with the market witnessing a turnover of $250.67 million, showing an improvement from the previous day’s figure.
The Central Bank of Nigeria (CBN) recently resumed forex sales to licensed BDC operators, selling $20,000 to each at N1,450 per US dollar, which is N131.65 cheaper than the official rate of N1,581.65 recorded on Wednesday, July 17, 2024. This move aims to ensure liquidity in the retail market and support eligible invisible transactions.
Financial analyst and journalist Ishaya Ibrahim noted that this intervention by the CBN is expected to boost the naira’s performance and reduce the demand for the US dollar. He emphasized that continued support from the CBN, possibly through monthly or bi-monthly forex sales, could sustain the momentum and improve the naira’s value, especially impacting imports of petroleum products and other goods.
Despite the challenges, the naira showed some recovery against the US dollar earlier, trading at N1,576.66 on Tuesday, July 16, 2024, slightly up from N1,577 the day before. Traders quoted the dollar at a high of N1,592 and a low of N1,492.
These fluctuations highlight the ongoing volatility in Nigeria’s foreign exchange market, influenced by both market dynamics and regulatory interventions. The CBN’s efforts to stabilize the naira through strategic forex sales to BDCs are crucial in managing the currency’s value amidst external pressures.
