Despite Headwinds, Naira Appreciates In Parallel Market, Steadies For 3 Days

Despite economic headwinds, the the naira has continue to appreciate in the parallel market in the last three days even as it maintained consistency in the official market.

It could be recalled that the National Bureau of Statistics (NBS), had released inflation rate which stands at 27.33% in October, up from the September 2023 rate of 26.72%.

The October 2023 headline inflation rate represents a 0.61 %-point increase compared to the figure for the previous month of September. 

But, according to Aboki FX, as monitored by our Correspondent, the naira maintained its consistency even as it appreciated marginally against the United States dollar.

For instance, while the market closed at N1140, on Monday at the parallel market, it appreciated on Tuesday and closed at N1,135. The parallel market, however, maintained consistency by closing at N1,135 on Wednesday and Thursday.

Also, the naira has been appreciating against the US dollar at the the Nigerian Autonomous Foreign Exchange Fixing (NAFEX), the country’s official exchange rate window.

It appreciated to N839.48/$ on Monday and did same on Wednesday, appreciating to N818.99/$.

NAFEX is the reference rate for spot FX operations in the autonomous FX market, which comprises recognised FX trading segments, including but not limited to the inter-bank market, the I&E FX Window, and any such approved and recognised trading segment as may be defined.

A black market operator, Saidu Abdulrahman, who spoke with our Correspondent ,said the dollar sells for N1,050 while they buy at N1,020, showing another significant appreciation in the black market.

However, speaking on sustainability of the rise in naira value against the US dollar, the chief executive officer, Cowry Asset Management Limited, Johnson Chukwu, said the Central Bank of Nigeria (CBN), should continue to make the market liquid.

According to him, sufficient supply of foreign exchange into the market will drive up the value of the naira and crash the value of FX especially the US dollar.

He stated further that there would be liquidity in the market when there is improvement in the country’s crude oil production.

“Whenever the CBN improves supply into the market, naira will appreciate at FMDQ and whenever the supply is not sufficient enough to meet demand, it will depreciate. Basically, the CBN is the key leader because right now the market has no commercial viability. We don’t have a situation where the supply will be enough to meet demand in the autonomous Market so, CBN intervention largely determines what happen in the market.

“Liquidity will come when we have an improve crude oil production. That’s the fastest route to get liquidity sufficient enough to clear arrears.

“The only thing is to get more liquidity and that will be through the improvement in crude oil production or government access borrowing like they are planning to do now,” he stated.