Exchange Rate Gains For Third Straight Day On Official Market

The exchange rate between the naira and the dollar strengthened for the third consecutive day, closing at N1,534.9/$1 on the official market. This marks the strongest level the naira has reached in 7 days.

The official NAFEX rate, which serves as the average rate and benchmark rate used by the CBN, was quoted at N1,567.65 on March 1st, 2024.

The intra-day high reached N1,600/$1, while the intra-day low was N1,425/$1.

The official exchange rate has remained below N1,600 since February 28th, indicating a gradual return to stability in the official market.

The official exchange rate has not moved above N1,600 since February 28th, suggesting that the official market is gradually becoming more stable.

Why is the Naira rising?

The exchange rate last moved above N1,600/$1 on February 28th, when it sold for N1,609.51/$1.

Since then, it has established a trend that should reassure policymakers, selling for N1,595.11 on February 29 and N1,548.25 on March 1.

The central bank increased its efforts to fight inflation, causing the official exchange rate to drop to N1,615.94/$1.

Read: Official Exchange Rate Closes Week At N1,548.25/$1

The central bank sold more than N3 trillion in Treasury Bills and OMO bills combined, increased its benchmark monetary policy rate to 22.75%, and unveiled new rules for the BDCS's functioning.

It started selling forex to BDC operators and banned more than 4,000 operators for not having the necessary licenses.

Governor Yemi Cardoso of the CBN continued to promote hot money inflows by hosting a virtual event with foreign portfolio investors.

The top bank also tightened regulations on Binance, a cryptocurrency trading platform, working with law enforcement to limit its activities.

The average daily forex turnover over the last three trading days has increased to $250 million from $160 million the week before.

Information gathered from a cross-section of parallel market operators indicates that the exchange rate on the parallel market was quoted at roughly N1,600/$1, despite these advancements in the official market.