Naira Strengthens as Dollar Exchange Rate Plummets Below N1,400 at Black Market
The Nigerian naira has demonstrated a notable recovery against major global currencies, with the United States dollar crashing below the N1,400 threshold at the parallel market. This development comes as traders announce new exchange rates, reflecting improved foreign exchange supply conditions and positive market sentiment.
Black Market Rates Show Significant Appreciation
At the black market, the naira appreciated by N30 against the dollar, trading at N1,390 per dollar compared to the previous day's rate of N1,420 per dollar. A forex dealer, identified as Abdullahi, provided insights into the current trading dynamics, stating, "I am currently selling dollars at N1,390 per dollar and buying at N1,370 per dollar. For now, I am trying to avoid purchasing dollars because I am uncertain about the rate's direction. Many traders are adopting similar strategies, with some buying as low as N1,350 to minimize potential losses."
Official Market and Other Currency Performances
The naira's gains extended beyond the black market. At the official market, the currency advanced by N11.82 or 0.88%, closing at N1,335.96 per dollar, up from N1,347.78 per dollar recorded on Monday. Similarly, at the GTBank forex desk, the naira gained N4, exchanging at N1,363 per dollar versus the previous rate of N1,367 per dollar.
Against other major currencies, the naira appreciated significantly. It strengthened by N32.43 against the pound sterling, settling at N1,806.75 per pound from N1,839.18 per pound, and by N18.82 against the euro, closing at N1,579.24 per euro compared with N1,598.06 per euro in the prior session.
Factors Driving the Naira's Rise
Market analysts attribute the naira's improved performance to enhanced foreign exchange supply. Increased contributions from exporters, non-bank corporates, and other market participants are expected to further boost liquidity and stabilize flows in the coming weeks. Additionally, Nigeria's external reserves have risen to $47.80 billion, marking an increase of $135.75 million, supported by stronger oil-related inflows and improving market stability.
Challenges for Bureau De Change Operators
Despite the positive trends, Bureau De Change (BDC) operators face operational hurdles. Reports indicate that BDCs have struggled to purchase dollars from commercial banks, even a week after the Central Bank of Nigeria (CBN) permitted their re-entry into the Nigerian Foreign Exchange Market (NFEM). Operators cite strict conditions outlined in the CBN's recent circular as the primary cause, leading to delays and reduced market participation.
Dangote's Optimistic Prediction for the Naira
In a related development, Aliko Dangote, chairman of the Dangote Group, has expressed optimism about the naira's future. Speaking at the launch of the Nigeria Industrial Policy in Abuja on Tuesday, February 17, Dangote predicted that the currency could strengthen to N1,100 per dollar this year. He highlighted that government reforms are beginning to yield positive outcomes for manufacturers, with the naira currently trading around N1,300 per dollar. The event was attended by Vice President Kashim Shettima, Secretary to the Government of the Federation George Akume, and representatives from the Manufacturers Association of Nigeria and the United Nations.
The naira's recent appreciation signals a potential shift in Nigeria's economic landscape, driven by policy adjustments and market dynamics. Stakeholders will closely monitor these developments as the currency continues to navigate global and domestic pressures.
