Naira appreciates to N1,173.88/$1 on official market, best in 2 months

The exchange rate between the naira and the dollar saw a significant appreciation on Tuesday closing the day at N1,173.88/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window.

This appreciation marks the highest closing rate since April 26, when the exchange rate was N1,339.23/$1, based on data from FMDQ.

At the Lagos street market, currency traders, also known as bureau de change (BDC) operators, quoted the naira at a firmer N1,480 to the greenback on Tuesday as against N1,498/$1 on Monday.

On Friday, May 24, 2024, the exchange rate was N1,482.81/$1, with a minor increase of 0.19 percent. This marginal appreciation comes after the naira snapped its four-day winning streak. The FX turnover on Friday was significantly higher at $556.25 million, which represented an increase of 231.99 percent.

The massive increase in FX turnover was likely attributed to the CBN’s aggressive liquidity management strategy, which saw the apex bank raise a substantial N1.16 trillion from the Open Market Operation (OMO) bill auction.

This move forms part of the CBN’s efforts to control inflationary pressures and stabilize the naira amidst ongoing economic challenges.

However, the FX turnover decreased sharply by 67.50 percent, amounting to $180.8 million on Monday. The substantial drop in FX turnover suggests a lower demand for dollars, which is a plausible factor contributing to the appreciation of the naira.

When fewer dollars are being bought, the demand decreases, leading to a stronger naira against the dollar.

Against other currencies, the naira exchanged at N1,888 to the British pound sterling, N1,630 to the Euro, N1,112 to the Canadian Dollar and  N150 to the Chinese Yuan on Tuesday.

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