Naira Appreciates as CBN Clears $7bn Backlog

The Nigerian Naira made significant gains against the US dollar on Wednesday, marking a notable rebound both at official and parallel markets. This surge followed the Central Bank of Nigeria’s announcement of clearing all valid foreign exchange backlogs, fulfilling a crucial commitment by Governor Olayemi Cardoso to address a $7bn backlog. According to data from the FMDQ Securities Exchange, the naira closed trading at 1,410/dollar in the parallel market and N1,492 at the official Nigerian Autonomous Foreign Exchange Market.

The naira’s appreciation at the official market, up by N68 or 4.5%, and a gain of 13.5% or N190 at the parallel market, signifies a positive trend. This surge has been attributed to speculators dumping their dollar stocks amid reduced demand, following stringent measures by the CBN. Recent crackdowns on illegal Bureau De Change (BDC) operators by the Economic and Financial Crimes Commission (EFCC) have also contributed to stabilizing the naira.

Currency traders across Abuja and Lagos have reported varied reactions to the changing rates. While some express optimism, others face challenges, with concerns about minimizing losses. Despite fluctuations, the market anticipates further improvements, especially with increased forex turnover and fresh reforms by the CBN aimed at enhancing liquidity.