The Nigerian naira witnessed a powerful strengthening as it exchanged at N1400 against the United States dollar in the parallel market.
This surge demonstrates a significant improvement in the value of the national currency.
Market reports indicate that parallel market operators were selling at N1400/$1, attracting holders of dollars searching to sell. The recent upswing in the exchange rate can be attributed to speculators offloading their dollar reserves due to decreased demand.
The Naira’s gain of N12 in just one day is particularly noteworthy, considering that it represents a staggering N57.36 increase compared to the rate of N1,617.96 per USD traded a mere week ago.
Notably, the naira has successfully maintained a position below the N1,600 per USD mark for two consecutive days, a threshold it has sustained for a remarkable stretch of nine days since March 5th, 2024.
Simultaneously, the official market witnessed a drop in the exchange rate, reaching N1,560/$1 on Tuesday. This marks the strongest performance of the naira since March 4th, when it closed at N1534/$1.
The Central Bank’s upcoming Monetary Policy (MPC) meeting, scheduled for a later date, will deliberate on crucial decisions regarding the possibility of maintaining the Monetary Policy Rate (MPR) or pursuing further adjustments. During the previous meeting, the apex bank displayed a bullish stance on interest rates, implementing the highest single increase on record by raising MPR by 400 basis points to 22.75%.
The recent surge in the naira’s value may be connected to the foreign investors’ growing interest in the Central Bank’s Open Market Operations (OMO) auctions and Nigeria’s Treasury bills. According to reports, foreign investors constituted a significant majority, accounting for approximately 75% of subscribers in these auctions.
Moreover, the Central Bank has reported a substantial inflow of foreign exchange over the past month. In February alone, remittances from Nigeria’s diaspora reached an impressive $1.3 billion, marking a fourfold increase from the previous month’s figure of $300 million.
The naira’s resurgent performance on the parallel market, coupled with the influx of foreign investments and increased remittances, paints an optimistic picture for Nigeria’s economic outlook.