Market News

Naira closes strong at N1,050/$ at parallel market - THE NATION

APRIL 16, 2024


The naira yesterday exchanged at N1,050 to dollar at the parallel market.

It exchanged at N1,125 to dollar on over the weekend, representing N75 appreciation. Naira appreciated by 0.56 per cent to close at N1,136 to dollar at the official market.

The local currency had of recent commenced rapid recovery, as volatility in the market dropped after the Central Bank of Nigeria (CBN) commenced dollar sales to bureau de change operators.

The CBN recently directed that all authorized dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.

“In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the bank said.

Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

“The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” a street trader told Business Day on Tuesday morning.

Former Executive Director, Keystone Bank Limited, Richard Obire advised that Nigeria’s heavy and skewed outward-oriented consumption of goods and services as seen in decades of long substantial bills for food and energy imports should be reversed to save the naira.

Also, the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale that will enable the country to fully engage its large population to create widespread prosperity works against the naira.

Managing Director/CEO, Financial Derivatives Company Limited, Bismarck Rewane disclosed that cost pressures are likely to ease due to the naira’s rebound.

Rewane, also an economist, said the naira had since February, appreciated significantly across the markets, fueled by sanitisation of the forex market, an increase in forex supply and a fall in the demand for dollars.

The settlement of the $7 billion verified forex backlog of forward commitments have boosted confidence and improved the credibility of the Central Bank of Nigeria (CBN).

“However, the pressing question remains, will the naira tumble again? The answer is No, if Nigeria continues to do the right things. Prospects for forex earnings are promising, with foreign portfolio investments on the rise. Nigeria’s key export commodities have also seen significant price surges, with cocoa trading at a record high of over $10,000 per tonne in the global market and oil prices exceeding $85pb as oil production reached an impressive 1.48mbpd in February 2024,” Rewane stated.


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