Naira surges by ₦3.31 against Dollar in official market
In a significant turn of events, the Naira appreciated by ₦3.31 at the official market on Tuesday, closing at ₦1,465.68 to the dollar. This marks a 0.22% increase from Monday’s rate of ₦1,468.99, according to data from the FMDQ Exchange, which oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM). The positive movement in the Naira’s value was accompanied by a notable rise in trading volume, with daily turnover climbing to $268.17 million from Monday’s $161.41 million.
Rising Trade Volumes and Market Performance
The appreciation of the Naira was not an isolated incident but part of a broader trend of increased activity in the foreign exchange market. The Investor’s and Exporter’s (I&E) window, a key segment for foreign exchange transactions in Nigeria, saw the Naira trading within a range of ₦1,549.00 to ₦1,401.00 against the dollar. This fluctuation highlights the dynamic nature of the market and the varying levels of supply and demand for foreign currency.
Praise from Bureau De Change Operators
The Association of Bureau De Change Operators of Nigeria (ABCON) lauded the Central Bank of Nigeria (CBN) for its reforms, which they believe have been instrumental in the recent appreciation of the Naira. Dr. Aminu Gwadabe, President of ABCON, emphasized the importance of sustaining these positive trends through continuous policy support from the CBN.
“Volatility is like runoff water; if not directed, it will direct itself. I am happy to see multiple agencies coming together to confront these challenges,” Gwadabe remarked, highlighting the collaborative efforts between fiscal and monetary policy initiatives and security agency interventions as crucial to stabilizing the Naira.
Call for Technological Upgrades and Collaboration
Dr. Gwadabe stressed the need for technological advancements and closer collaboration among operators, regulators, the government, and security agencies. He argued that these measures are essential to exert greater control over the foreign exchange market and reduce volatility.
Policy Reforms Driving Appreciation
The appreciation of the Naira can be attributed to several key reforms initiated by the CBN. These include measures to enhance transparency in the foreign exchange market, improve liquidity, and curb speculative trading practices. By aligning fiscal policies with monetary strategies and incorporating security interventions, the CBN has created a more stable environment conducive to the Naira’s recovery.
Impact of Increased Turnover
The rise in daily turnover to $268.17 million signifies a growing confidence among market participants. Higher trading volumes typically reflect increased activity from both domestic and international investors, suggesting a more robust and liquid market. This upsurge in activity is likely a response to the CBN’s efforts to create a more predictable and stable trading environment.
Expert Insights on Market Stability
Financial experts have noted that the coordinated efforts to stabilize the Naira are beginning to yield tangible results. The involvement of multiple agencies in managing the foreign exchange market has helped to address the root causes of volatility. By tackling issues such as speculative trading, illegal currency hoarding, and ensuring compliance with market regulations, the authorities have managed to create a more favorable environment for the Naira.
Sustaining the Positive Momentum
Maintaining the upward momentum of the Naira will require ongoing commitment to the reforms currently in place. This includes continuous monitoring of market activities, timely interventions to address emerging challenges, and fostering a collaborative approach among all stakeholders. The CBN’s role in this process is critical, as its policies and regulatory oversight will determine the long-term stability of the Naira.
The Role of Technology in Market Control
Emphasizing the importance of technological upgrades, Dr. Gwadabe highlighted how advanced systems can enhance market surveillance and improve compliance with regulations. Implementing cutting-edge technology can help in real-time monitoring of transactions, ensuring transparency, and reducing opportunities for market manipulation.
Collaborative Efforts and Future Prospects
The call for greater collaboration between operators, regulators, the government, and security agencies underscores the need for a unified approach to managing the foreign exchange market. By working together, these entities can develop and enforce policies that support market stability and foster a conducive environment for economic growth.
The Naira’s recent appreciation against the dollar is a promising sign of economic resilience and effective policy implementation. With sustained efforts from the CBN, technological advancements, and robust collaboration among stakeholders, the Naira is well-positioned to maintain its upward trajectory. This development not only boosts investor confidence but also strengthens Nigeria’s overall economic outlook, setting the stage for continued financial stability and growth.
