Analysts have tied the performance of the naira in the parallel market on Friday to the interventions by the Central Bank of Nigeria and Nigeria’s activities in the bond market, among other factors.Nigeria’s local currency ended the week with 7.78 percent gains, having appreciated from N1,735/$ reported on November 29.
Abuede noted that increased crude oil production has bolstered Nigeria’s export capacity, which has led to higher foreign exchange inflows, alleviating some of the pressure on the naira.“The naira’s current positive trajectory, trading within a range of N1,670 to N1,760 to the US dollar in recent days or weeks, reflects the combined effects of the monetary authority’s efforts and prevailing market dynamics,” Abuede said.
“The resultant rise in foreign exchange inflows has provided a much-needed cushion for the naira, alleviating some of the pressure it faced earlier in the year.“These inflows have been pivotal in stabilising the currency, enhancing liquidity in the forex market, and supporting economic activity reliant on dollar availability.”
“It has improved significantly. We had the domestic dollar bond that was issued, $500 million. That also has some impact on reserves.”Yusuf said the outlook of the foreign exchange market may have also influenced the performance of the naira, as the capital raised from the bond market influences the expectations of speculators.
“I think the outlook may remain positive because the CBN seems to be in a much better position now to be periodically intervening in the market.”According to the economist, “if we don’t manage the fiscal side well, and we continue to throw liquidity from the fiscal side into the economy, it may reverse all these gains that we are beginning to see in the market”.
“This appreciation is nothing more than liquidity we are receiving from portfolio investors. You know, recently we issued a bond that was over-subscribed,” he added.