How the naira recovered near the N1,500 per dollar ceiling

• The naira has gradually pulled back towards the N1,500 per dollar market in the official market
• The Nigerian currency appreciated to N1,558.75 compared to the N1,637 it traded the previous day
• The gap between the official and parallel markets, however, grew by almost N100 per dollar

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Nigerian currency bounced back after a significant depreciation in the official and parallel markets on Tuesday, September 10, 2024.

The exchange rate between the naira and the dollar rose to N1,558.75 at the official Nigeria Autonomous Foreign Exchange Market (NAFEM) on Wednesday, September 11, 20024, from the N1,637 per dollar it traded the previous day.

Naira recovers in the official market after the CBN's injection of FX in the market Credit: Picture Alliance/Contributor
Source: Getty Images

Naira gains 4.81% in the official market

Experts had thought that the fall in FX turnover on Tuesday, September 10, 2024, would significantly affect the naira's further performance as crude oil prices slumped in the international market.

The naira gained about 4.81% from the previous day’s rate of N1.637.59 following the price of Nigerian crude in the official market above $75 per barrel.

The recent naira performance shows a positive market sentiment as it pulled back into the N1,500 ceiling.

Data from the FMDQ Exchange shows that the Nigerian currency closed at N1,558.75 per dollar on Wednesday, September 11 2024, representing a 4.81% recovery compared to the previous day’s rate.

FG’s dollar bond over-subscribed

The naira also recovered the day the Nigerian government announced the success of its dollar domestic bond, which it says was over-subscribed by $400 million.

Currency dealers quoted the dollar at a high of N1,659.50 per dollar and a low of N1,540.

Records show that dollar supply or FX turnover surged to $221.21 million, exceeding Tuesday’s figure of $143.15 million.

However, in the parallel segment of the foreign exchange market, the Nigerian currency exchanged between N1,655 and N1,645 per dollar.

This development widens the gap between the official and parallel markets to almost N100, gradually defeating the Nigerian government's plans to unify the exchange rates.

Senior banker and economist Janet Ogochukwu described the naira's appreciation as a surprise following the high dollar demand in the FX markets.

"The only situation in which the naira rises is when there is low demand for the dollar. But the recovery is a surprise and cheery news."It also comes when the Nigerian government is happy about the success and subscription of its domestic dollar bond. I think those mixes added to the naira's recovery," she said.

CBN leaves Customs FX rates for cargo clearance unchanged

Legit.ng previously reported that the Central Bank of Nigeria (CBN) may have ignored experts’ warnings about constantly changing the Customs exchange rates for cargo clearance to leave them at N1,000 per dollar quarterly.

The development comes as the Customs Exchange rates for Cargo clearance remained unchanged for almost one week.

Information from the Customs trade portal shows that the last time the CBN tweaked the Customs FX rates was September 5, 2024, when it crashed from N1,625.88 per dollar to N1,564.929.

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Source: Legit.ng