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Tuesday, April 23, 2024

Naira makes marginal gain against US dollar amid market fluctuations

Efforts to Stabilize Exchange Rates Intensify as Economic Concerns Persist

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The Nigerian naira experienced a slight upturn against the United States dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, closing at N1,542.58/$ compared to the previous rate of N1,551/$.

This marginal gain reflects a 2.9% appreciation from Monday’s rate of N1,598.54, though it represents only a modest 0.58% increase from Tuesday’s rate.

Data from the FMDQ Securities Exchange, responsible for overseeing FX trading in Nigeria, reveals that the naira reached an all-time intra-day high of N1,755 and an intra-day low of N1,050.

Meanwhile, the total foreign exchange turnover surged to $172.14 million, marking a significant increase from the figures recorded in previous trading sessions.

Despite these developments, the disparity between the official and parallel market rates widened further, with the naira depreciating to N1,900 against the dollar in the parallel market on Wednesday. This disparity, now exceeding N300, has raised concerns about round-tripping activities.

Bureau De Change operators and analysts anticipate further fluctuations, with some predicting the naira may reach an all-time low of 2,000/dollar at the parallel market by next week.

Efforts to address exchange rate stability and curb speculative activities have intensified, as operatives of the Economic and Financial Crimes Commission (EFCC) reportedly conducted raids on currency speculators in the Wuse Zone 4 market.

Collaborative efforts between the EFCC, the Central Bank of Nigeria (CBN), and other law enforcement agencies aim to restore stability to the exchange rate and enhance forex liquidity.

President Bola Tinubu’s administration has articulated plans to raise $10 billion to bolster forex liquidity and stabilize the naira. The CBN has implemented various policies to regulate forex supply, including directives to commercial banks and international oil companies.

However, challenges persist in the forex market, with concerns raised about transparency and disclosure at NAFEM. Stakeholders call for greater accountability and independence in forex trading platforms to address exchange rate volatility effectively.

While efforts to obtain comments from the CBN were unsuccessful, it is evident that sustained measures are necessary to address the scarcity of foreign exchange and promote economic stability in Nigeria.

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