Naira Bounces Back, Rises to N1,113/$ After Three Weeks of Decline

The naira has recorded its first appreciation in three weeks, trading at N1,113 to the dollar on Friday, after hitting a record high of N1,279/$ on Thursday evening. The naira also gained N166 to the dollar in the P2P market, as currency traders adjusted their strategies in anticipation of a stronger local currency.

The naira had previously enjoyed a slight increase of N8 against the US dollar on October 3, 2023, before losing 6.86% on Tuesday on the Nigerian Autonomous Foreign Exchange Market. The recent gains are attributed to low demand for dollars, as very few people are willing to pay around N1300/$, sensing a potential appreciation of the naira.

The naira’s recovery is partly driven by the Renewed Hope Agenda of President Bola Ahmed Tinubu, who has initiated various economic reforms to enhance viability and sustainability, stimulate productivity and growth, and achieve social and inclusive development.

Tinubu’s administration has intervened in critical sectors of the economy, with the aim of ending poverty, ensuring food security, creating jobs, expanding access to capital, promoting security, fairness and rule of law, and fighting corruption.

Some of the key reforms include the unification of foreign exchange rates to eliminate arbitrage, the lifting of FOREX restrictions on the importation of 43 items to ease pressure from the parallel market and stabilise prices, the expected $10 billion FOREX inflows to improve liquidity and stability in the market, and other ongoing measures to strengthen the naira and curb inflation.

The minister of finance Wale Edun announced recently that Nigeria is set to receive $10 billion in foreign currency inflows over the next few weeks to boost liquidity in the foreign exchange market, which has hampered growth in Africa’s largest economy.

Edun also said that President Tinubu signed two executive orders allowing the issuance of domestic financial instruments denominated in foreign currencies and the transfer of all cash outside the banking system into banks.

These developments have created a positive impression among traders and speculators, who expect the exchange rate to improve against the dollar in the near future and are therefore selling lower to avoid losses.

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