The Naira recovers as the Central Bank of Nigeria’s foreign exchange debt backlog is resolved.

Busy Bee
Busy Bee November 3, 2023
Updated 2023/11/03 at 10:56 AM

The foreign exchange market reacted to news that the Central Bank of Nigeria has started clearing its FX backlog, causing the naira to rise to N1,120 against the dollar. This is an appreciation of N50 or 4.27% compared to its previous trading price of N1,170. Currency traders, also known as Bureaux De Change operators, noted that the naira was recovering well and had quickly rebounded from its morning exchange rate of N1,170 to close trading at N1,120.

Traders expressed optimism that the naira’s value would continue to improve, with one trader mentioning that the dollar was currently being sold at N1,040 and bought at N1,030. The trader added that the exchange rate was still decreasing and had not yet stabilized.

Kadri, another trader, noted that the dollar’s exchange rate was N1,120, down from N1,150 in the morning. Abubakar confirmed the decrease, stating that the current rate was N1,120, down from N1,150 earlier, with the dollar still declining. Muhammad added that the selling price for the dollar was N1,125, compared to N1,150 in the morning.

The President of the Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, confirmed that the dollar closed trading at N1,120 on Thursday. He attributed this to the Central Bank of Nigeria’s efforts to clear their backlog, and expressed optimism about the market’s response to these actions.

In other news, the naira appreciated by 0.76% at the official market, closing at N793.28 to the dollar on Thursday. This was an improvement from the previous day’s rate of N799.32/$, according to information from FMDQ OTC Securities Exchange.

According to data from the regulatory platform for official foreign exchange trading in Nigeria, the highest price recorded during the day’s trading was N1,018.60/$, while the lowest price was N730.00/$.

Recent reports revealed that the central bank has started resolving some of its outstanding foreign exchange obligations. Insider sources confirmed that the apex bank reached settlements with several banks, including Citibank, Stanbic IBTC, and Standard Chartered.

The Federal Government has also announced its expectation of receiving $10bn to address forex backlogs and stabilize the value of the naira. This announcement was made by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during the 29th Nigerian Economic Summit.

He mentioned that, besides the supply of foreign exchange through NNPC, there will be an increase in production and a decrease in expenditure.

Additionally, they have explored forward sales and engaged with sovereign wealth funds that are willing to invest and offer advanced support. As a result, they foresee a line of sight for approximately $10 billion worth of foreign exchange in the near future, possibly within weeks, rather than months.

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