The value of the naira saw an improvement in the official forex market on Monday, attributed to the assurance given by the Governor of the Central Bank of Nigeria, Olayemi Cardoso, regarding the bank's efforts to address the currency's volatility.
According to data obtained from the Financial Markets Dealers Quotation (FMDQ), the local currency appreciated by 1.09 percent to close at N1,419.86 per dollar at the official forex window. This marks a positive shift from the previous rate of N1,435.53 per dollar observed on Friday.
Last week Tuesday, the naira experienced a significant decline, reaching an all-time low of N1482.57 per dollar at the official window, despite attempts by the central bank and the Federal Government to enhance liquidity in the foreign exchange market.
However, following a series of policy announcements from the CBN, the local currency has shown signs of recovery.
On the parallel market, the naira's performance was less favorable, with trading ranging between N1,440 and N1,460 per dollar at the close of business on Monday, as reported by Bureau de Change operators. This is in contrast to the previous rate of N1,450 per dollar observed on Friday.
Abubakar Abdusallam, a BDC operator at the Sheraton Hotel in Abuja, mentioned that the dollar's gradual appreciation against the naira is due to the activities of hoarders, with the selling rate reaching N1,455 per dollar on Monday.
Cardoso highlighted the central bank's efforts to address challenges hindering the supply of foreign exchange into the country, emphasizing measures taken to enhance the attractiveness of naira assets to foreign investors. He also disclosed the settlement of verified FX requests amounting to $2.3 billion, with an outstanding FX obligation of N2.2 billion set to be paid soon.
Additionally, Cardoso revealed that $2.4 billion of the $7 billion FX backlog identified upon assuming office was found to have issues, ranging from invalid import documents to entities and individuals receiving more foreign exchange than requested, or even without requesting at all.
Furthermore, in September 2023, FTSE Russell downgraded Nigeria from a "frontier" to an "unclassified" market due to challenges faced by foreign investors in repatriating their funds. The central bank commenced the clearing of FX backlog in banks in November 2023.