Nigeria’s naira has strengthened to N1,382 against the United States dollar after interventions by the Central Bank of Nigeria (CBN).
The naira rose to a two-month high of N1,382.35 per dollar on Thursday, March 21, 2024, at the official foreign exchange market.
The last time the naira closed as strongly as Thursday’s rate was on January 29, 2024, when the dollar was quoted at N1,348.63 at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data compiled from the FMDQ Securities Exchange.
Following Thursday’s trading session, the naira saw a remarkable strengthening, appreciating by 7.98 percent compared to the N1,492.61 quoted on Wednesday at the NAFEM.
However, at the parallel market, the local currency experienced a slight depreciation of 1.98 percent, with the dollar closing at N1,510 on the day compared to N1,480 on Wednesday.
This development occurred barely 24 hours after the Central Bank of Nigeria (CBN) revealed that it had cleared $7 billion in valid foreign exchange claims while also bolstering the country’s forex reserves.
The announcement was made by Hakama Sidi-Ali, the CBN’s Acting Director of Corporate Communications, in a statement issued on Wednesday.
The statement partly reads, “The Central Bank of Nigeria has announced that all valid foreign exchange backlogs have now been settled, fulfilling a key pledge of the CBN Governor, Mr Olayemi Cardoso, to process an inherited backlog of $7bn in claims.
“Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.”
Meanwhile, Muda Yusuf, CEO of the Promotion of Private Enterprise, said, it is too early to begin to celebrate anything. “While we recognise the improvement, we need to give it more time.”
Bala M. Bello, a member of the MPC, said in his personal statement that the depreciation in the naira exchange rate with significant pass-through effects further exacerbates the threat to price stability. He said keeping the exchange rate within desired levels is crucial for price stability.
“While the recent exchange rate policies implemented by the Central Bank are gradually showing some positive results, implementing complementary policy actions by the MPC and the fiscal authority that can increase foreign exchange inflows in the short to medium term, will lead to even better outcomes,” Bello said.
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