Nigerian naira continues recovery, reaches N950/$ at parallel market
The Nigerian naira continued to strengthen against the US Dollar, reaching an average of N950 per dollar in the parallel market on Friday. This marks a substantial improvement for the local currency, as it gained N175 in value compared to its rate of N1,125 per dollar on Thursday.
Simultaneously, the official Investors and Exporters (I&E) window demonstrated renewed strength, trading at an impressive rate of N776.14 per US dollar, reflecting an appreciation from the N793.28 per dollar recorded at the close of Thursday's trading session.
Analyzing intraday data from FMDQ, the highest spot rate observed was N1,100.60 per dollar, while the lowest spot rate recorded was N700 per dollar. Furthermore, the official I&E window reported a daily volume turnover of $98.82 million, indicating a 27.41% decrease compared to the previous day's turnover of $136.11 million.
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.