The Nigerian Naira continued its upward trajectory against the US Dollar on Monday, marking the third consecutive gain in the New Year, according to official market data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Closing at N856.57 to a dollar, the Naira appreciated by 1.45%, indicating a notable gain of N12.56 compared to the previous day’s closing rate of N869.13. The positive trend was also observed in the parallel forex market, where the exchange rate stood at N1245/$1, reflecting a 0.80% increase from the previous day’s closing rate. Peer-to-peer traders quoted the rate at around N1235.17/$1.
The recent surge in the Naira’s value is attributed to the disbursement of $2.25 billion from the $3.3 billion foreign exchange (FX) support facility provided by the African Export-Import Bank (Afreximbank) to the Nigerian Federal Government. The facility aims to address the acute liquidity shortage in the country’s FX market.
The comprehensive financial agreement, signed on December 29, 2023, involves Afrexim Bank as the Mandated Lead Arranger and the United Bank for Africa (UBA) as the Local Arranger. NNPC Limited plays a crucial role as the principal financier, with Guvnor and Sahara Energy contributing significantly as key participants.
The $3.3 billion facility is structured to enhance dollar supply and alleviate Nigeria’s FX supply challenges, particularly in the official trading window of NAFEM. The first tranche of $2.25 billion is expected to ease forex liquidity pressures, with UBA serving as the Onshore Depository Bank.
NNPC, along with major oil trading firms such as Sahara Energy, Vitol, Oando, and Gunvor, is actively involved in facilitating the financing of the transaction. These firms have also collectively contributed $100 million to the facility, showcasing a collaborative effort to stabilize Nigeria’s forex market.
As the Naira strengthens against the Dollar, this financial arrangement is anticipated to bring stability to the foreign exchange market and foster economic resilience in Nigeria. Market participants are closely monitoring the impact of the recent infusion of funds on the country’s currency dynamics.
