Naira and Dollar
The naira on Thursday appreciated to N1,595.11 per dollar in the official Nigerian Foreign Exchange Market (NAFEM).
Meanwhile the NAFEM exchange rate rose above the parallel market exchange rate which closed at
N1,490 per dollar yesterday.
Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,595.11 per dollar
from N1,609.51 per dollar on Wednesday, indicating N14.4 appreciation for the naira.
Similarly, the naira yesterday appreciated to N1,490 per dollar in the parallel market from N1,610 per dollar on Wednesday.
As a result, the gap between the official and parallel market exchange rates narrowed to N135.11 per dollar yesterday from 49 kobo per dollar on Wednesday.
Recall the Central Bank of Nigeria, CBN released several foreign exchange guidelines in recent weeks, which preceded the slight improvement.
The benchmark interest rate, commonly known as the Monetary Policy Rate, was recently increased by 400 basis points by the Monetary Policy Committee on Tuesday, rising from 18.75 percent in July 2023 to 22.75 percent.
It also increased the Cash Reserve Ratio from 32.5 percent to 45.0%, maintained the Liquidity Ratio at 30%, and modified the asymmetric corridor surrounding the MPR to +100/-700 basis points from +100/-300 basis points.
Government officials have consistently maintained that the naira is currently undervalued.
Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said the naira is undervalued largely due to distortions by perpetrators in the foreign exchange market.
“As and when we come up with these distortions, we will take them off and throw them away and where there are distortions that come about as a result of bad behaviour, we will ensure that those who do it will face the music as a deterrent to ensure that others in future do not take that route,” Cardoso said.
He further explained that such perpetrators confuse the FX market.
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