The Business NG - August 02, 2024

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The naira surged to N1,570/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window on Thursday, marking an increase of 2.47% from the previous day's rate of N1,608.73/$1. This is the highest one-day increase since July 22, 2024, when the Central Bank of Nigeria (CBN) decided to resume selling foreign exchange (FX) to authorized dealers.

The local currency has closed below the N1,600 ceiling, which it crossed about a week ago. However, it is gradually recovering from the significant loss recorded last week, snapping a six-day losing streak on Wednesday when it appreciated by 0.77%.

Despite the gain, FX turnover appears to be unstable. While it rose by 62.81% on Wednesday to $270.81 million, it crashed on Thursday, August 1, 2024. Nigeria's FX turnover fell by 47.45% to $142.32 million, likely suggesting either low trading activity or a low supply of dollars on the official market.

The CBN has been trying to boost liquidity in the FX market by selling foreign exchange to authorized dealers. Last week, it sold a cumulative amount of $148 million to 29 authorized dealers. The foreign exchange was sold at exchange rates ranging between N1,470.00/$1 and N1,510.00/$1.

The naira's gain is a positive development for the Nigerian economy, which has been facing challenges due to the COVID-19 pandemic and other factors. However, the unstable FX turnover suggests that there may still be challenges ahead.