In a remarkable turn, parallel market operators are now offering a buy price of N1400/$1 for those willing to sell dollars, signaling a notable strengthening of the Naira.
This shift comes as a result of recent market dynamics.
Speculator’s Behavior Towards The Naira
The exchange rate has seen an upward trend lately, primarily due to speculators offloading their stockpile of dollars amidst dwindling demand. This behavior has contributed to the surge in the Naira’s value.
Multiple sources within the parallel market confirmed that the Naira has seen a rise from yesterday’s close of around N1600/$1 to N1500/$1 (with some quoting N1550/$1) for potential sellers. However, they are buying at N1400/$1, allowing them a spread of N100/$1.
“The stronger Naira is a welcome development,” said Musa, a trader, expressing satisfaction with the market shift. “It’s good for our business,” he added.
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Official Market Trends
Meanwhile, on the official market front, the exchange rate dropped to N1,560/$1 on Tuesday, marking the Naira’s strongest performance since March 4th when it closed at N1534/$1.
This trend underscores the currency’s resilience amidst economic fluctuations.
Key Factors Driving Naira’s Surge
The recent surge in Naira’s value is attributed to several key factors. The Central Bank’s forthcoming Monetary Policy Meeting holds significance as it deliberates on interest rates.
At its previous meeting, the apex bank raised the MPR by 400 basis points to 22.75%, a record hike.
Moreover, foreign investors’ interest in CBN’s OMO auction and Nigeria’s Treasury bills may have bolstered the Naira’s gains.
The apex bank reported that foreign investors dominated these auctions, constituting about 75% of subscribers.
Additionally, there has been a significant influx of forex in recent months, with remittances from Nigeria’s diaspora surging to $1.3 billion in February, marking a fourfold increase from the previous month’s $300 million.
As the Naira strengthens and the parallel market hits the N1400/$1 mark, stakeholders remain cautiously optimistic about the currency’s trajectory, closely monitoring further developments in the coming days.