Naira surges by 3.30%, hits ₦1,354 against dollar
In a significant turnaround, the Nigerian naira experienced a remarkable gain of 3.30% to close at N1,354 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window. This surge marks a notable improvement from the previous week’s closing rate of N1,400 per dollar at the NAFEM window.
The surge in the naira’s value follows strategic interventions by the Central Bank of Nigeria (CBN) aimed at stabilizing the foreign exchange market and bolstering the local currency’s performance. Last month, the CBN disclosed its sale of $10,000 to each Bureau De Change (BDC) operator at a favorable rate of N1,021 per US dollar, marking the second such intervention within the month. Earlier, on April 8th, the apex bank had sold $10,000 to each BDC operator at a rate of N1,101 per US dollar.
In a circular signed by the CBN’s Director of the Trade and Exchange Department, Hassan Mahmud, the bank reiterated its commitment to promoting transparency and stability in the foreign exchange market. It instructed each BDC to sell the acquired dollars to eligible customers at a rate not exceeding 1.5% above the purchase price, further enhancing accessibility to foreign exchange for legitimate transactions.
Moreover, the CBN recently mandated all authorized dealers to facilitate the payment of Personal and Business Travel Allowances (PTA/BTA) to their customers exclusively through electronic channels, including debit or credit cards. This move aims to curb foreign exchange malpractices and ensure greater transparency in forex transactions. The directive prohibits the disbursement of PTA/BTA in cash, underscoring the CBN’s commitment to modernizing and streamlining forex operations.
However, despite these interventions, importers continue to face challenges in accessing the required funds from both the official FX market and the black market. The surge in demand for foreign currency stems from legitimate needs such as Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical expenses. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as evidenced by the use of Form Q.
Commenting on the situation, a street trader highlighted the scarcity of dollars in the market, coupled with surging demand, as key drivers behind the naira’s recent appreciation. Former Executive Director of Keystone Bank Limited, Richard Obire, emphasized the need to address Nigeria’s excessive reliance on imports, particularly in the food and energy sectors, to mitigate pressure on the naira. He also underscored the detrimental impact of corruption-driven capital outflows on the country’s production capacity and overall economic stability.
As the CBN continues its efforts to stabilize the foreign exchange market and shore up the naira’s value, stakeholders remain cautiously optimistic about the currency’s prospects amid ongoing economic challenges and global uncertainties.
