On Wednesday, November 29, 2023, the value of the Nigerian naira increased in relation to the US dollar, ending at N831.47/$1 on the official market.
Experts had predicted that the Central Bank of Nigeria’s (CBN) recent attempt to reduce part of its foreign exchange backlog would increase trust in the currency, and this favorable trend is in line with their expectations.
At the conclusion of business on Wednesday, the native currency gained 6.06% to settle at N831.47 to a dollar, according to figures from the NAFEM, the official forex market.
This represents an N50.41 gain or a 6.06% increase in the local currency compared to the N841.14 it closed on Tuesday.
The intraday high recorded was N1159/$1, while the intraday low was N700/$1, representing a wide spread of N459/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $140.35 million, representing a 18.88% growth compared to the previous day.
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However, the naira weakened at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 0.26%, quoted at N1160/$1, while peer-to-peer traders quoted around N1159.47/$1.
The Central Bank of Nigeria (CBN) has said it has made tranche payments to 31 banks to clear the backlog of foreign exchange forward obligations.
The apex bank also disclosed that it has set up foreign exchange frameworks to address the FX issues.
Yemi Cardoso, governor of the CBN disclosed this on Friday at the bankers’ dinner in Lagos.
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“We have already witnessed improvements in FX market liquidity in recent weeks, as the market responded positively to tranche payments which have been made to 31 banks to clear the backlog of FX forward obligations.
“We have been subjecting these payments to detailed verification to ensure only valid transactions are honoured. In a properly functioning market, it is reasonable to expect significant FX liquidity, with daily trade potentially exceeding $1.0 billion.
“We envision that, with discipline and focused commitment, foreign exchange reserves can be rebuilt to comparable levels with similar economies.”
The value of the Nigerian currency has been steadily declining as the country struggles with foreign exchange illiquidity and the inability to pay down its forex backlog.
