The Naira witnessed a significant rebound against the US dollar on Wednesday, both at the official and parallel markets, with notable gains observed at the black market. This surge followed the Central Bank of Nigeria’s announcement of final settlements for all valid foreign exchange backlogs, a commitment in line with CBN Governor Olayemi Cardoso’s pledge to address a backlog of $7bn in claims.
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Acting CBN Director of Corporate Communications, Mrs. Hakama Sidi Ali, disclosed this development, highlighting the recent clearance of $1.5bn from the backlogs. As per data from the FMDQ Securities Exchange, the Naira closed trading at 1,410/dollar at the parallel market and N1,492 at the official Nigerian Autonomous Foreign Exchange Market (NAFEM).
The Naira’s gain at the official market represents a substantial appreciation of N68 or 4.5%, while at the parallel market, it surged by 13.5% or N190. This upward trend is attributed to a decline in demand as speculators begin to offload their dollar stocks amid CBN’s strict measures.
Recent circulars by the CBN, coupled with EFCC’s crackdown on illegal BDC operators, have contributed to reducing the volatility of the Naira. However, currency traders expressed mixed feelings about the new rates, with some forced to sell at a loss due to decreased demand for the dollar.
Meanwhile, the clearing of FX backlogs aligns with the CBN’s comprehensive strategy to stabilize the exchange rate and mitigate imported inflation, fostering confidence in the banking system and economy. This pivotal development serves as a beacon of confidence for investors and businesses, signaling a path towards a more resilient and stable economy.
Additionally, some banks have mandated customers to submit tax clearance for the last three years when applying for Form A, emphasizing compliance with tax obligations and supporting efforts to stabilize the Naira. With recent monetary policies and regulatory measures, the Naira’s outlook appears promising, with Goldman Sachs predicting a potential appreciation to N1200 per US dollar within twelve months.
