The value of the naira took a turn for the north, as it appreciated by 12 percent by the end of last week’s trading activities.
This is has the Central Bank of Nigeria (CBN) said it has cleared all valid foreign exchange backlogs worth 1.5billion.
The value of the naira which had closed the previous week at N1,502 to the dollar saw a spike in value to close last week Friday at N1,431.49 to the dollar.
Aside from the liquidity provided by the clearing of the backlog, the inflow into the Nigeria Autonomous Foreign Exchange Market (NAFEM) also boosted liquidity.
Furthermore, the apex bank also intervened in the market thrice within the week with total sales of $195 million. While Inflow at the official market had improved by 47.2 percent week on week to $1.5 billion from the $1 billion inflow recorded the previous week.
Similarly, the value of the naira at the parallel market had improved by 6.7 percent to sell at N1,495 to the dollar.
Consequently, in the Forwards market, the naira rates recorded appreciation across various contracts with the 1-month up by 9.6 percent to N1,460.81/USD, 3-month which was up by 9.4 percent to N1,500.26, 6-month which was up by 8.4 percent to N1,562.99 and 1-year which was up by 6.5 percent to N1,705.82 to the dollar.
According to Analysts, the CBN’s increased intervention in the foreign exchange market which includes the payment of the last portion of the forex backlogs and the commencement of retail sales of dollars to banks within the range of N1,300 – N1,400 to the dollar will boost confidence in the FX market and stabilise the naira.
While the CBN is expected to continue its forex intervention in the near term, analysts said they do not expect a substantial increase in forex liquidity due to the relatively weak forex reserves.
However, barring any notable shocks, the reduced currency speculation and improved FPI inflows due to high naira yields may continue to strengthen the local currency in the near term.”
