In a surprising turn of events, the Nigerian Naira has shown significant resilience in the face of a 66.33% drop in dollar liquidity, gaining ground against the US dollar. Despite the volatility in the foreign exchange market, the Naira closed at N741.50/$1 at the official investor and exporter window, marking a significant gain of 3.61% compared to its previous rate.
The Bureau De Change (BDC) operators played a role in this development by reducing their asking price for the US dollar. The average black market dollar rate was N769.6/$1, a slight decrease from the previous day’s rate of N770.2/$1. This move by the BDC operators is seen as a strategic response to the current market dynamics.
However, the forex market is not without its challenges. The market has been characterized by high intraday volatility, with the dollar trading between N461.5 and N841 at the investors and exporters (IE) window. This wide swing has raised concerns about the possibility of market manipulation. The Central Bank of Nigeria (CBN) has been urged to put measures in place to check this volatility and ensure market stability.
Despite these challenges, the Naira’s performance has been commendable. The currency’s exchange rate has a significant impact on Nigeria’s economy, affecting the prices of goods and services, inflation, exports, imports, foreign reserves, and external debt. A stable and realistic exchange rate is desirable for economic growth and development.
The Naira’s recent performance is seen as a sign that supply may be gradually recovering. However, the huge outstanding unmet requests in the forex market could continue to exert pressure on the exchange rate in the coming months. Therefore, it is crucial for the CBN to put in place a sustainable intervention framework to moderate the volatility in the forex market.
While the Naira’s recent gains are a positive development, it is essential to address the underlying issues in the forex market to ensure long-term stability. The CBN’s role in managing market volatility and ensuring a stable exchange rate is crucial in this regard. With the right measures in place, the Naira can continue to hold its ground against the dollar, contributing to Nigeria’s economic stability and growth.