Following expectations of possible intervention by the Central Bank of Nigeria in the foreign exchange market to shore up liquidity and tackle unwholesome practices in the market, the Naira has continued to rally strongly against the dollar in both the official and parallel foreign exchange markets.
This sentiment was further buoyed by the news of a $3 billion emergency crude oil repayment loan, which the Nigerian National Petroleum Company Ltd secured from the Afreximbank on Wednesday. The facility from Afreximbank is to enable NNPC Ltd to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate market by meeting forex demand, and shoring up the value of the Nigerian currency.
Separately, the Acting CBN Governor, Folashodun Shonubi, met President Bola Ahmed Tinubu two days earlier on Monday and while briefing State House correspondents said that the President was concerned about the negative impact of the current exchange rate by the operators.
The Ag. CBN Governor promised to soon come up with stringent measures to stabilise multiple exchange rates in the country stating that the bank will in a few days take measures to make the operators in the exchange market comply with directives on the trading of forex.
Following the disclosure by the Ag. CBN Governor, the Naira which traded at N785 to the dollar in the official market on Tuesday rallied to N767 to the dollar the next day and on Thursday further appreciated to appreciated to N745 to the dollar at the I&E window.
Similarly, at the parallel market, the local currency traded as low as N952 to the dollar over the weekend as activities of speculators intensified. However after the hint from the Ag. CBN Governor on Monday, the Naira appreciated significantly at the parallel market selling for N910 to the dollar.
With the announcement of the $3 billion NNPCL upcoming intervention, the Naira further gained value at the parallel market to N850 per one dollar on Thursday as currency speculators who were hoarding the greenback and creating artificial scarcity to drive up prices started selling their dollars frantically to avoid incurring bigger losses.
It is hoped that the CBN quickly unveils punitive measures to sanction banks and BDC operators who connive with parallel market operstors to unduly devalue the Naira. With the additional $3 facility awaiting injection, it is expected that the exchange rate will continue to remain stable as these interventions begin to yield fruits.