Naira Gains Strength At Parallel Market

In a notable turn of events, the Nigerian currency, the naira, has shown signs of robust appreciation at the parallel section of the foreign exchange (FX) market.

On Wednesday, the naira was traded at ₦1,500/$, marking a significant improvement of 9.09 percent from the ₦1,650/$ rate observed on Monday.

Bureau de Change (BDC) operators, pivotal to currency trading at the parallel market, have set the buying rate at ₦1,450 and the selling price at ₦1,500.

This pricing strategy yields a profit margin of N50, showcasing a moment of profitability amidst the currency’s upward trajectory.

Simultaneously, at the official window, the naira experienced an appreciation, trading at N1609.51 against the dollar on Wednesday.

This represents a 1.67 percent increase from the ₦1,582.94/$ rate traded on Monday, indicating a broader trend of strengthening across different segments of the FX market.

Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), weighed in on the currency’s recent performance, suggesting that the naira is fundamentally undervalued.

According to Cardoso, this undervaluation is primarily due to manipulative practices by some actors within the foreign exchange market.

The governor’s comments hint at underlying challenges in achieving a fair valuation for the naira, despite its recent gains.

This development in the FX market comes as a positive sign for the Nigerian economy, suggesting a possible stabilization of the naira amidst ongoing efforts by the CBN to regulate and streamline currency trading.

Cardoso said, “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.”

He added that such perpetrators confuse the FX market.