Naira Regains Value after CBN Update
The Nigerian naira regained part of the large daily depreciation sustained early in the week following the central bank’s rebuttal of a widespread report on currency redenomination.
In the foreign exchange market, the Nigerian Naira traded positively against the US dollar, appreciated by 17.96% to close at N815.32 at the Nigerian Autonomous Foreign Exchange Market (NAFEM). Demand was slower than the previous day recorded, causing a positive movement in the exchange rate.
FX analysts at Cowry Asset Limited said the improvement comes as the federal government charts the path to attaining stability of the local currency as well as improving the level of FX market liquidity.
The CBN said there are no plans to redenominate Nigeria’s legal tender, the Naira. CBN’s Director of Corporate Communications Department, Isa AbdulMumim, made this known in a statement on Tuesday in Abuja.
“The attention of the CBN has been drawn to the wide circulation of a text message suggesting that the apex bank plans to redenominate the country’s legal tender, the Naira, with effect from January 2024.
However, analysts appear to be discounting the statement, saying the apex bank is known for first-instance denial on most of the policies it plans to implement.
“Whilst the apex bank may be considering reforms, such are subject to laid down procedure in line with provisions of the CBN Act”
in the parallel market, the Naira’s performance was positive as it appreciated further at the close of trading on Tuesday by 0.34%. The local currency closed at N1,176 per dollar from the previous sessions’ N1,180 per dollar.
Based on the pattern observed exchange rate convergence could be lost should spot rates diverge significantly. At $33.33 billion, Nigeria’s gross external reserves remain tight, covering 7 months of imports.
In the commodity market, crude oil prices rallied due to the ongoing war in the Middle East. Brent crude was up 0.75% to $87 per barrel, while the West Texas Intermediate (WTI) crude oil gained 0.87% to $83.03 per barrel. Naira Steadies as Banks Issue Update on FX Purchase