Naira Unboxed after Huge FX Inflows Notice
The Nigerian naira exchange rate left the hook with more than 3% day on day gain against the dominant US dollar in the currency market on Wednesday.
At the official market, the naira appreciated by 3.03%, closing at ₦1,543.84 per US dollar. The strong daily gains following the apex bank’s huge FX inflows into the economy.
Meanwhile, the naira slipped by 0.63%, ending the day at ₦1,600 per US dollar in the parallel market as invisible FX demand spiked about foreign currency level in the informal currency market.
In a statement, the Central Bank of Nigeria (CBN) has reported a significant increase in remittance inflows, reaching $553 million in July 2024, a 130 per cent increase from the corresponding period in 2023.
The apex bank said the figure represents the highest monthly total inflows on record and reflects its ongoing efforts to enhance liquidity in Nigeria’s foreign exchange market.
“The substantial growth in remittance receipts is attributable to policy measures introduced by the CBN to enhance liquidity in Nigeria’s foreign exchange market”, the authority said.
CBN said these measures include granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller model, and enabling timely access to naira liquidity for IMTOs.
Diaspora remittances are a crucial source of foreign exchange for Nigeria, supplementing both foreign direct investment and portfolio investments, according to the Bank.
The CBN claimed that its initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.
CBN explained that the increase in remittances is a strong testament to the success of the ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.
Recent data from the National Bureau of Statistics (NBS) revealed that Nigeria’s year-on-year headline inflation rate slowed in July 2024, for the first time in 19 months – a clear indication that the CBN’s monetary policy tightening measures are delivering results.
The CBN anticipates that these measures will contribute to achieving its broader objective of maintaining stability in the foreign exchange market.
The Bank said it will continue to monitor market conditions and adjust policies as necessary to enable greater remittance flows into Nigeria. Elsewhere, oil prices remained relatively stable today, with Brent prices rising by 0.19% to $77.35 and WTI prices increasing by 0.03% to $73.18.
On the other hand, gold prices decreased, as investors awaited the minutes from the U.S. Federal Reserve’s latest policy meeting for insights on potential interest rate cuts. As a result, the price of gold dropped by 0.14% to $2,547.10 per ounce. #Naira Unboxed after Huge FX Inflows Notice
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