The Nigerian naira strengthened against the US dollar, finishing at N791.75/$1 in the official market.
The naira climbed 5.87 percent, or N49.39, compared to the previous day’s rate of N841.14/$ at the Nigerian Autonomous Foreign Exchange Market, according to statistics from the FMDQ Securities Exchange.
The naira’s rise was predicted, however, due to the Central Bank of Nigeria’s recent decision to clear part of its foreign exchange backlog.
The biggest offer for the dollar by investors was N1120/$1, while the intraday low was N701/$1, marking an N419/$1 difference. At the closing of trade, the forex turnover was $157.78 million.
Meanwhile, the CBN announced last week that it has started clearing the backlog of foreign exchange forward contracts. According to experts, the move will benefit the naira, the business community, and the economy as a whole.
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Since foreign investors departed local assets, the country has faced persistent money shortages. Since then, investors have yet to return, and the central bank has struggled to meet the country’s demand for dollars.
The central bank’s payments follow the finance minister’s October 23 declaration that Nigeria was anticipating $10 billion in inflows to restore FX market liquidity.
It will be welcomed by local lenders, who have been struggling to meet client expectations due to persistent dollar shortages in Africa’s largest economy.
Speaking on the CBN’s clearing of forex backlogs, Gabriel Idahosa, deputy president of the Lagos Chamber of Commerce and Industry, stated that clearing backlogs of FX forwards will restore trust in the conventional market.
“The new move by CBN to clear backlogs with international lenders gives the signal that the apex bank is back in trading and business. Apart from bringing back letters of credit, it generally brings back confidence in the traditional market. It restores the confidence of portfolio investors and international airlines. It will also bring foreign direct investments,” Idahosa added.