Nigerian naira continues recovery, reaches N950/$ at parallel market

Points clés à retenir

Friday's appreciation marked the second consecutive day of recovery for the Naira, following the Central Bank of Nigeria's commencement of clearing some of its foreign exchange backlogs on Thursday. This effort is seen as a significant step in alleviating the mounting pressure in the foreign exchange market. JP Morgan expects the naira to trade at N850 per US dollar at the Investors' and Exporters' Forex window before the end of 2023, noting the recent efforts to restore a flexible foreign exchange regime may continue, especially with the intention of implementing tighter monetary conditions. The US giant investment bank also highlighted that the interbank foreign exchange rate has recently risen to over N900 per US dollar, up from N750, significantly narrowing the gap with the parallel market rate, which is now slightly above N1,000. It anticipates that a combination of tighter policy measures, more attractive interest rates, and foreign exchange levels will discourage additional dollarization and potentially attract some foreign capital.