In a significant turnaround, the Nigerian naira has experienced a remarkable recovery, surging by more than 20% over the past eight days, POLITICS NIGERIA has observed.
This development is strongly fueled by a series of policy adjustments and enforcement measures implemented by the Central Bank of Nigeria (CBN).
After reaching a low of N1,915 per dollar on February 21 amid widespread speculation, the CBN’s proactive measures aimed at curbing currency speculation and racketeering have instilled confidence in the market, leading to a resurgence in the naira’s value.
The recovery journey commenced on February 22, buoyed by optimism surrounding ongoing policy initiatives by the CBN and the overall positive macroeconomic outlook, which are expected to bolster the national currency in the medium to long term.
At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira kicked off the week on a positive note, appreciating by 0.91% to N1,534 per dollar. Although it experienced a slight depreciation to N1,602.43 per dollar yesterday, the overall trend remains encouraging.
Similarly, the parallel market witnessed a strengthening of the naira by 1.64% to N1,623 per dollar, signaling increasing stability in the forex market and near convergence between official and parallel exchange rates.
This resurgence in the naira’s value coincides with a consistent improvement in Nigeria’s foreign exchange reserves, which surged by $200.45 million to $33.72 billion over the weekend.
Market analysts attribute the currency rebound to the CBN’s policy interventions, particularly its flexibility in monitoring, evaluating, and realigning policies to suit prevailing market conditions.
Financial Derivatives Company (FDC), led by Bismarck Rewane, expressed optimism about the sustainability of the naira’s recovery, citing recent decisions by the CBN. FDC anticipates that the recent adjustment of the Monetary Policy Rate (MPR) to 22.75% will help mitigate inflationary pressures, thereby strengthening the naira further.
Echoing similar sentiments, Cordros Capital Group highlighted the encouraging pace of reforms by the CBN, which bodes well for the naira’s prospects.
The group emphasized the importance of following through with implemented reforms and clearing the forex backlog to enhance liquidity in the market over the medium term.
