The Naira’s two-day rally ended on Wednesday, with the Nigerian currency losing N35 to fall to N1,185 per dollar on the parallel market.
The Naira had plummeted to N1,230/$1 on Friday from the N1,315/$1 it traded on Thursday before further declining to N1,150 /$1.
That trend was, however, reversed on Tuesday as the Nigerian currency shed N35 to close at N1,185 against the US greenback.
It was a different scenario at the official window as the naira appreciated against the dollar on Tuesday, 31 October 2023 to close at N815.32/$1.
Earlier, the federal government had announced that it is planning to introduce new rules to the FOREX market which is geared towards boosting the value of the naira and stifling the activities of illegal currency trading.
The new rule will include expanding the official market to accept all legitimate transactions and ensuring the “illicit” black market does not get supply.
All these measures are expected to result in the naira closing its more-than-45 per cent gap with the unofficial rate and reaching a “fair price” by year-end.
Nigeria failed to take advantage of the favourable opportunity to attack the global oil market.
The geopolitical instability that has hit Eastern Europe since February 2022 has caused adverse consequences for the economy and the lack of dollar liquidity in central bank vaults to keep the naira below the 1,000 naira/$ mark on the black market.
However, this has led the CBN to take unorthodox measures to support the local currency in the foreign exchange market. Currency traders are re-evaluating their strategies following reports that FG plans to digitize forex transactions and discourage speculative demand and cash hoarding.
Sources of FX liquidity remain largely elusive. Nigeria’s largest source of dollar revenue is from oil sales, but Nigeria produces less than OPEC’s daily quota of 1.8 million barrels per day, which is decreasing month by month despite rising oil prices.
Peoplesmind
