The official market closed with the Nigerian Naira closing at N791.75/$1, indicating an increase in value relative to the US dollar.
The naira increased by 5.87 percent, or N49.39, at the Nigerian Autonomous Foreign Exchange Market from the previous day’s rate of N841.14/$, according to statistics from the FMDQ Securities Exchange.
However, the recent action by the Central Bank of Nigeria to reduce part of its foreign exchange backlog was anticipated, which is why the naira appreciated.
At the intraday low of N701/$1, investors placed their highest bid for the dollar at N1120/$1, indicating a wide spread of N419/$1. $157.78 million in forex turnover was recorded at the end of trade.
The CBN, meanwhile, announced last week that it has started to clear the backlog of forward contracts for foreign exchange. Experts predict that the action will help the naira, the business community, and the overall economy.
Since foreign investors stopped purchasing local assets, the nation has consistently had a dollar deficit. Since then, investors haven’t come back, and the nation’s top bank has had trouble keeping up with demand for dollars.
The payments by the central bank come after Finance Minister Wale Edun declared on October 23 that Nigeria anticipated receiving $10 billion in inflows to increase the liquidity of the foreign exchange market.
Local bankers will be relieved because they have been finding it difficult to satisfy client requests as a result of ongoing dollar shortages in the biggest economy in Africa.
Speaking about the CBN’s clearing of the forex backlog, Gabriel Idahosa, deputy president of the Lagos Chamber of Commerce and Industry, predicted that clearing the backlog of FX forwards will restore trust in the conventional market.
The central bank’s recent action to pay off debts owed to foreign lenders indicates that trading and commercial operations have resumed at the top level. In addition to restoring letters of credit, it usually restores faith in the conventional market. International airlines and portfolio investors both regain trust as a result. Idahosa continued, “It will also result in foreign direct investments.
