Naira gains by 4.79% against Dollar at I&E forex window
…Transaction volume soars by 138.57%
By Sodiq Adelakun
Naira experienced a remarkable gain of 4.79 percent against the US dollar on Wednesday at the Investors and Exporters (I&E) forex window.
This positive development was attributed to increased liquidity in the market, which encouraged willing buyers and sellers to engage in transactions.
At the close of trading on Wednesday, the dollar was quoted at N738.18/$1, a significant improvement from the N775.34/$1 quoted on Tuesday at the I&E window, according to data from the FMDQ.
This upward trend in the Naira’s value brought a glimmer of hope to investors and market participants.
The surge in liquidity was evident as the volume of transactions skyrocketed by 138.57 per cent, reaching $170.15 million on Wednesday, compared to $71.32 million recorded the previous day.
This surge in activity showcased the renewed confidence in the Nigerian economy and its currency.
FX dealers were bidding as high as N800/$1, slightly lower than the N799.9/$1 bid on Tuesday. The lowest bid recorded on both days was N701/$1, indicating a range of bids that reflected the market’s diverse dynamics.
Meanwhile, at the parallel market, also known as the black market, the Naira maintained a steady exchange rate between N920 and N925 at various street trading areas across the country. This stability in the parallel market was a positive sign, as it indicated a convergence between the official and unofficial exchange rates.
The first half of 2023 was a challenging period for the Naira, as it faced significant pressures due to the collapse of all official foreign exchange windows into the import and export window. This move, aimed at streamlining and managing the country’s foreign exchange policies and operations, had an immediate impact on the Naira’s exchange rate, leading to a rapid depreciation in its value.
However, the recent gain in the Naira’s value against the dollar suggests a potential turnaround for the currency. This development could be attributed to the government’s efforts to address the challenges faced by the Naira and restore stability to the foreign exchange market.
The resilience of the Naira in the face of adversity is a testament to the determination of the Nigerian government to restore confidence in the economy. By implementing measures to increase liquidity and streamline foreign exchange operations, the government has taken a proactive approach to address the challenges faced by the Naira.
The gain in the Naira’s value is not only a positive sign for investors but also for the average Nigerian citizen. A stronger Naira means increased purchasing power and a potential reduction in the cost of imported goods, which could alleviate the burden on consumers.
The improved liquidity in the market has also created opportunities for businesses to thrive. With increased access to foreign exchange, companies can import essential raw materials and equipment, leading to improved productivity and economic growth.
The government’s decision to merge the official FX windows into the I&E window was a bold move aimed at simplifying foreign exchange operations. While it initially caused a depreciation in the Naira’s value, the recent gain suggests that the market is gradually adjusting to the new system.
As the Naira continues to recover, it is crucial for the government to maintain a balanced approach to foreign exchange management. This includes implementing policies that promote transparency, stability, and market-driven exchange rates.
Furthermore, the government should focus on diversifying the economy to reduce its reliance on oil exports. By promoting sectors such as agriculture, manufacturing, and services, Nigeria can attract foreign investment and strengthen its currency in the long run.
The recent gain in the Naira’s value should not be seen as a standalone achievement but rather as a stepping stone towards sustained economic stability. It is essential for the government to build on this momentum and continue implementing reforms that foster a conducive business environment.
The Naira’s gain against the dollar is a positive development that signals a potential recovery for the Nigerian economy. With increased liquidity, stability in the parallel market, and proactive government measures, the Naira has shown resilience in the face of challenges. As the country moves forward, it is crucial to maintain a balanced approach to foreign exchange management and focus on diversifying the economy for long-term stability and growth.
