The Nigerian naira has appreciated against the US dollar, gaining 0.88% to reach N1,125/$ on the parallel market. This follows a period of stability at N1,135/$ for three days. The naira had faced pressure recently but has shown signs of moderation after reaching N1,310 last month. On the official Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira fluctuated, weakening by 2.70% to N841.14/$ on Thursday, compared to N818.99/$ on Wednesday. The CEO of Cowry Asset Management Limited, Johnson Chukwu, emphasized the role of Central Bank intervention and improved crude oil production in sustaining naira liquidity.
- Naira Appreciation:
- The naira appreciated by 0.88% against the US dollar on the parallel market, reaching N1,125/$ after stabilizing at N1,135/$ for three days. This marks a moderation from recent pressure on the naira.
- Fluctuation on NAFEM:
- The official exchange rate window, NAFEM, experienced fluctuations, with the naira weakening by 2.70% to N841.14/$ on Thursday, compared to N818.99/$ on Wednesday. NAFEM serves as the reference rate for spot FX operations in the autonomous FX market.
- Black Market Operator’s Insight:
- A black market operator reported selling the dollar for N1,050 and buying at N1,020, indicating another significant appreciation in the black market.
- Sustainability and CBN Intervention:
- The CEO of Cowry Asset Management Limited, Johnson Chukwu, emphasized the role of sustained Central Bank of Nigeria (CBN) intervention in ensuring liquidity in the foreign exchange market. He mentioned that sufficient supply of foreign exchange would drive up the value of the naira.
- Factors Influencing Naira Value:
- The naira’s value is linked to factors such as CBN interventions, crude oil production improvement, and the overall liquidity situation in the foreign exchange market. Chukwu highlighted that increased crude oil production would be a key driver of liquidity.
- Market Dynamics and Commercial Viability:
- Chukwu noted that the market currently lacks commercial viability, and the CBN’s intervention plays a crucial role in determining market dynamics. Liquidity improvements, whether through increased crude oil production or government borrowing, are seen as essential for naira stability.
The recent appreciation of the naira against the US dollar on the parallel market, coupled with fluctuations on NAFEM, highlights the ongoing challenges and dynamics in Nigeria’s foreign exchange market. The role of Central Bank intervention and factors such as crude oil production remain pivotal in determining the sustainability of naira liquidity and stability.