The naira has been stable over the past month, trading in the official foreign exchange market between N1,476 and N1,485 against the US dollar; nonetheless, sustainability is still a cause for concern.
The naira closed the trading week on Friday at N1,485.53 per dollar, which was not different from N1,485.36 on Thursday.
According to data from the FMDQ Securities Exchange Limited, the dollar rates earlier in the week were N1,476.12 on June 3, N1,476.95 on June 4, N1,488.60 on June 5, N1,481.49 on June 6, and N1,483.99 on June 7.
Charlie Robertson, head of macro strategy at FIM Partners UK Ltd, said,
Higher dollar inflows in recent times have been attributed to the naira’s stability, as they have strengthened the country’s foreign reserves.
Recall that the World Bank and Afreximbank contributed over $5.95 billion to the Nigerian economy in less than a month, bolstering the country’s foreign exchange reserves and naira’s value.
The Central Bank of Nigeria (CBN) reports that as of June 20, 2024, Nigeria’s external reserves stood at $33.640 billion, up 2.81 percent month over month from $32.720 billion on May 20, 2024.
Tajudeen Ibrahim, director of research and strategy at ChapelHill Denham, said,
The CEO of Economic Associates, Ayo Teriba, recalled that the local currency had previously experienced stability in April following the second tightening, during which time the naira had been the world’s best-performing currency before swiftly plummeting to the bottom.
He added,
He suggested that the country focus more on increasing reserves above the point at which market volatility is expected. The country currently possesses insufficient reserves for an economy the size of Nigeria.
The Association of Bureau De Change Operations of Nigeria (ABCON) president, Aminu Gwadabe, stated that the country’s productivity has significantly decreased and that the departure of international corporations indicates a lack of faith in the economy. Both interest rates and inflation are declining.
He advised,
Charles Abuede, a financial analyst opined that the onus lies on the monetary and fiscal authorities to put in place friendly policies to aid the management of the fx market.
He noted,
TimesNow.com.ng reported that financial analysts said the naira may get a lift starting this week, given the federal government’s intention to use the $2.25 billion World Bank loan awarded to Nigeria.
The principal goal of the $2.25 billion loan is to support Nigeria’s implementation of economic reforms that have increased revenue and caused the country’s largest-ever cost-of-living crisis.
Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing is the first initiative, with an estimated $1.5 billion in funding.
Source: TimesNow.com.ng
