"Naira jumps to 8-month high of 1,120\/$ as dollars flood black market"

" Naira jumps to 8-month high of 1,120\/$ as dollars flood black market \r\n\r\nThe Naira on Thursday rose to an eight-month high of 1,120 per dollar on the parallel market, popularly called black market, driven by a series of foreign exchange (FX) reforms of the Central Bank of Nigeria (CBN) that has unlocked dollar liquidity.\r\n\r\nWith the current exchange rate the Naira has gained 62.95 percent (N705) over the dollar compared to the level of N1,825\/$1 in February 2024, according to the data compiled from online platforms and street traders.\r\n\r\n\u201cThe dollar has fallen because there is no demand. The market is calm due to the holidays and there are enough dollars in the market now,\u201d one trader told BusinessDay on Thursday.\r\n\r\nNigeria\u2019s currency on Monday before the holidays strengthened to 1,230.61 per dollar on the official FX market, despite the declining external reserves.\r\n\r\nAfter trading on Monday, the Naira gained 1.66 percent as the dollar was quoted at N1230.61, stronger than N1,251.05 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data released by the FMDQ Securities Exchange.\r\n\r\nThe intraday high closed at N1,261 per dollar on Monday, stronger than N1,281 closed on Friday. The intraday low appreciated to N1,200 from N1,220 on Friday.\r\n\r\nDollar supply by willing buyers and willing sellers dropped by 49.43 percent to $125.55 million on Monday from $248.27 million recorded on Friday.\r\n\r\nThe external reserves, which gives the Central Bank of Nigeria (CBN) the firepower to defend the Naira have been declining, following the apex bank\u2019s interventions to stabilise the currency.\r\n\r\nData from the CBN showed that Nigeria\u2019s foreign currency reserves declined by 2.95 percent in the last 10 days to $33.434 billion as of April 4, 2024 compared to $34.449 billion in March 18, 2024.\r\n\r\nThe apex bank last month said it has successfully resolved all valid foreign exchange backlogs, as pledged by Governor Olayemi Cardoso, addressing inherited claims amounting to US$7 billion.\r\n\r\nTotal inflows into the NAFEM increased by 41.7 percent to $3.75 billion as against $2.64 billion in February \u2013 the highest level since March 2019 ($6.07 billion), data from the FMDQ indicated.\r\n\r\nNigeria\u2019s Central Bank on Monday reviewed the exchange rate for the Bureau De Charge (BDC) Operators to N1,101 per dollar from N1,251\/$1 as it plans to sell $15.88 million to 1,588 eligible BDCs.\r\n\r\nAs part of measures to control inflation and stabilise the Naira, the CBN last month raised its benchmark interest rate, known as the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent in February 2024.\r\n\r\nOn June 14, 2023, the CBN enacted several significant reforms, including the abolishment of market segmentation, consolidation of all segments into the Investors & Exporters window (now called the Nigerian Autonomous Foreign Exchange), and the reintroduction of the Willing Buyer, Willing Seller framework.\r\n\r\nIn August 2023, the CBN resumed Forex sales to BDCs but implemented a restriction on the buying and selling spread by BDCs to +\/-2.5 percent of the weighted average of transactions executed the previous day on the I&E window.\r\n\r\nIn January 2024, the apex bank imposed a limit on the Net Open Position (NOP) of banks in Nigeria, setting it at a maximum of 20 percent short or zero percent long holding of foreign currency assets and liabilities. Additionally, the CBN directed International Money Transfer Operators (IMTOs) to quote an exchange rate for Naira payout to beneficiaries based on the prevailing market price.\r\n\r\nIn February 2024, the CBN removed caps on the spread on interbank Forex transactions and lifted restrictions on the sales of interbank proceeds. Furthermore, the CBN restricted the payout of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) to electronic channels only.\r\n\r\nAccording to FSDH Research, the implementation of these measures has contributed to the reduction of volatility in the Naira in the FX markets.\r\n\r\nBy March 2024, the volatility of the Naira had further decreased following additional reforms by the CBN aimed at enhancing transparency and inflows into the FX market. On March 28, the NAFEM closing rate stood at N1309.4, reflecting a significant appreciation from its peak of N1,650 on February 26, 2024, a report by FSDH stated.\r\n\r\nAnalysts at FSDH expressed optimism, stating, \u201cWe believe that the recent FX reforms, coupled with high interest rates and improved oil production, will bring stability to the FX market.\u201d\r\n\r\n "

"Naira jumps to 8-month high of 1,120\/$ as dollars flood black market"

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