THE Nigerian currency lost approximately N402.28 to the dollar at the Central Bank of Nigeria (CBN) official window in this year’s first quarter (Q1), as checked by The ICIR.
It exchanged at N907.11 to the dollar at the start of the year and closed at N1,309.39 on March 28, representing a 44.35 per cent decline.Billboard
At the parallel (black) market, the naira only lost 7.79 per cent to close at N1,300 on March 28, from N1,206 as of January 2.
Read Also:
- Naira sustains gains as CBN sells $10,000 To BDCs at N1,251/$
- Abuse of naira: Ogun monarch suspended for two months
In the quarter under review, the naira had depreciated to as high as N1,915/$1.
It started appreciating in February after the apex bank resumed foreign exchange (FX) sales to licenced Bureaux De Change (BDC) operators.
In a statement to The ICIR on Sunday, March 31, the president of the Association of Bureaux de Change Operators of Nigeria (ABCON), Aminu Gwadabe, attributed the recent appreciation of the naira to the recall of BDCs to the mainstream FX market.
He also attributed it to CBN monetary policy tightening that had led to increased exchange rate, more investment in government instruments, and the clearance of a $7 billion FX backlog.
“The reconsideration of the BDCs into the mainstream foreign exchange market has not only demystified illegal economic behaviours of hoarding, rent-seeking, round tripping and FX holding position, and led to the emergence of exchange rate convergence,” Gwadabe said.
He asserted that the stability in the exchange rate has already started to impact the prices of goods and services positively.
According to him, the price of international school fees has dropped by 15 per cent, the cost of medical tourism has been reduced by 20 per cent, and airfares for local and international trips have dipped by 25 per cent.
He said, “The current developments in the foreign exchange market have started reigning in inflation as prices of most necessities are becoming relatively lower in the market. In a most serious note, the positive impacts include also heighten confidence of the public in the local currency as it eliminates currency substitution behaviour which hitherto being adding pressure on our local currency”.
The naira traded at N1,255/$1 on Saturday, March 30, even lower than the N1,269.765 that the rates BDCs were advised to sell, Gwadabe said, maintaining that a stable naira will attract more foreign portfolio inflows to the economy.
He noted that the naira had appreciated from the February low of N1,915/$1 to N1,255/$1 on Saturday, representing N660 gains for the naira.
According to the ABCON president, the previous practice where Nigerians took dollars from Nigeria for Hawala activities was seized as the reverse is the case where the purchase of dollars in Dubai is cheaper than in Nigeria and therefore created a business opportunity for dollars inflows rather than outflows to the economy.
He believes that FX earnings are promising, with foreign portfolio investments rising and over $1.5 billion inflows a few days after the Monetary Policy Committee raised the interest rate by 200 basis points.
At the Alpha Morgan Capital Quarterly Presentation (Q1’24), a renowned economist, Bismarck Rewane, while presenting on ‘Economic Review and Investment Outlook’ maintained that CBN was prioritising price stability over economic growth with a mandate to rein in inflation and stabilise the naira.
He believes that the naira, now appreciating after massive depreciation, will strengthen investor confidence.
“The naira will remain strong as long as we continue to do the right things,” Rewane said.