Traders Sell Dollar at New Exchange Rate As Naira Bounces Back in Forex Markets
In recent news, Nigerian banks such as Access Bank, UBA, and GTB, alongside currency traders, have adjusted their selling rates for the dollar, marking a positive turn in the forex market. This shift follows a strong performance of the naira in both the unofficial and official foreign exchange markets.
Nigerians are optimistic about the new month of May after a challenging performance of the naira in April. With the recent adjustments in selling rates for the dollar, there’s a renewed hope for stability and growth in the forex market.
The naira appreciated against the United States Dollar in the official market, particularly in the Nigerian Autonomous Foreign Exchange Market (NAFEM). Data from FMDQ Securities indicates that the naira closed at N1,390.96/$1 on Tuesday, April 30, 2024. This represents a significant increase of 1.9% or N28.15 compared to the previous day’s exchange rate of N1,419.11/$1.
One of the key factors driving this positive change is the boost in dollar supply. On Tuesday, forex transactions totaling $225.36 million were recorded, reflecting a 52.4% increase from the previous session’s $147.83 million. This surge in supply contributed to the strengthening of the naira against the dollar.
Additionally, the naira remained firm against the pound sterling and the euro in the official market, closing at N1,453.07/£1 and N1,247.03/€1, respectively. This stability across different currency pairs further reinforces confidence in the Nigerian forex market.
In the parallel market, traders reported a notable improvement in the naira’s value against the US Dollar. Abdulahi, a BDC trader, stated that the naira settled at N1,380/$1, marking a gain of N20 compared to the previous day’s closing rate of N1,400. This positive trend can be attributed to reduced demand for the dollar, possibly due to the holiday period.
The Central Bank of Nigeria (CBN) played a crucial role in stabilizing the forex market by conducting forex sales to licensed Bureau De Change Operators. Each BDC received $10,000, aimed at reducing the exchange rate disparity between the official and parallel markets. The CBN instructed BDCs to sell at a maximum rate of N1,269/$1 to achieve this objective.
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The recent adjustments in selling rates for the dollar, coupled with increased dollar supply and CBN intervention, have contributed to the positive performance of the naira in the forex markets. Nigerians remain hopeful that this trend will continue, fostering economic stability and growth in the country.