The naira appreciated by 27.16 per cent to close at N864.29/$ on the official Investors and Exporter window on Monday.
This is as the daily turnover of the dollar surged by 86.83 per cent to $132.46m at the closing of trading from $70.90m last Friday. The naira’s rise signifies a N234.76 gain from the all-time low of N1099.05/$ it closed trading last Friday according to data from the FMDQ Securities Exchange.
On Monday, trading opened at N867/$, before hitting a high of N1185.10/$, then a low of N720/$. It eventually settled at N864.29/$ as the daily turnover of the dollar hit $132.46m.
Monday’s rate signifies a marginal recovery for the national currency whose movement has been volatile since the Central Bank of Nigeria removed the rate cap on it.
Since the apex bank’s move to unify rates, the country’s foreign exchange reserves have fallen by about $1.6bn to $32.97bn. This decline in FX reserves has been blamed for the free fall of the naira.
Recently the Economist Intelligence Unit said Nigeria did not have enough in its FX arsenal to defend its exchange rate unification policy.
In its Africa Outlook report, it said, “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved. High inflation and a continued spread with the parallel market will leave the exchange rate regime unstable and result in periodic devaluations.”
Recently, the CBN Governor, Olayemi Cardoso, discussed Nigeria’s attempt to stablise its exchange rates. He said the bank was set to release new FX guidelines in the hope to save the market.
He said, “In order to ensure the proper functioning of domestic and foreign currency markets, clear, transparent, and harmonized rules governing market operations are essential. New foreign exchange guidelines and legislation will be developed, and extensive consultations will be conducted with banks and FX market operators before implementing any new requirements.”