Naira Rides Recovery Waves after Combative Measures
Pressures on the Nigerian naira cooled off following combative measures against foreign currency whales negatively influencing the value of the local currency. Data from the FMDQ platform showed the Naira strengthened against the US dollar by 4.96% to close at ₦1,582.94. During intra day trading session, FX spot rates had peaked at N1850 at the official market.
The apex bank has returned to the market with FX injections. The Central Bank of Nigeria (CBN) had halted FX market intervention after it floated the local currency. But the naira fortuned worsened and teh CBN discovered it could not shy away from selling dollars to support the supply side. At this moment in Nigeria, the CBN is under pressure to achieve its price and exchange rates stability.
The market expects ‘Lagos boys’ runing the country’s affairs to perform wonder under the renewed hope agenda, a tough call in a growth-starved Africa’s largest economy by size of her gross domestics products, rising population.
In the parallel market, the Naira gained against the US dollar to close at N1,628 per US dollar. Exchange rates at both markets have worsened until the Nigerian government took the fight to the door of the likes of Binance, OctaFX and other peer-to-peer cryptocurrency exchange platforms.
Most Nigerians had staked a bet against the local currency with N1800+ NGN-USDT (a Tether stablecoin pegged against the USD) for peer-to-peer trading. These platforms received large US dollars from a country struggling to meet eligible demand, thereby creating pressures in the local markets.
There was also a run at the parallel market, which forced the Central Bank of Nigeria (CBN) to review Bureau de Change Operations (CBN) guidelines. The CBN is now demanding recapitalisation of BDCs, restructuring and disclosures. Analysts said this will likely reduce the number of BDCs by half in the coming months.
MarketForces Africa gathered that securities operatives knocked on some illegal currency traders’ doors in Abuja last week as the naira suffered the largest freefall in years.
The Naira problem is multifaceted, according to LSintelligence Associates research analysts who believe that market cleaning efforts that the authority embarked upon were supposed to be the first move before the official devaluation of the naira.
According to analysts, unofficial market distortion was responsible for the majority of pressures facing the local currency, noting that Nigeria’s import dependency is cancerous to the future of the naira.
In the global commodities market, West Texas Intermediate (WTI) crude futures advanced by 0.08% to $76.56 per barrel on Monday. However, the Brent Crude decreased by 0.23% to close at $81.43 per barrel.
At the end of trading session yesterday, Nigeria’s gross external reserves settled at $33.44 billion ahead of expected Fx inflows into the country from various sources. #Naira Rides Recovery Waves after Combative Measures
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