By Anthony Nwachukwu
There was relief among manufacturers and importers as the naira gained N49.39 (5.24 per cent) Friday to close at N791.75/$ (down from N841.14 on Thursday) at the official market.
The gain, captured in the data from the Nigerian Autonomous Foreign Exchange (NAFEX) – the country’s official exchange rate window – came on the heels of recent efforts by the Central Bank of Nigeria (CBN) to clear the FX backlog and boost confidence in the currency.
The intraday high recorded was N1120/$1, while the intraday low was N701/$1, representing a wide spread of N419/$1. The official NAFEX window further revealed a forex turnover of $157.78 million at the close of trading of Friday, a 23.60 per cent decline from the previous day.
Meanwhile, the CBN last week said it has started clearing the backlog of foreign exchange forward contracts – a move that experts believe will strengthen the naira, bring relief to the business community and the economy at large.
The country has faced chronic dollar shortages since foreign investors exited local assets during a period of low oil prices. Since then, investors are yet to return and the CBN has struggled to meet the dollar demand of foreign investors seeking to repatriate funds, including airlines seeking to repatriate money from ticket sales.
The CBN’s payments follow the October 23 announcement by the Finance Minister, Wale Edun, that Nigeria was expecting $10 billion inflow to improve FX market liquidity.
Speaking on CBN’s clearance of forex backlog, Deputy President of Lagos Chamber of Commerce and Industry (LCCI), Gabriel Idahosa, said that clearance of backlog of FX forwards would restore confidence in the traditional market.
“The new move by CBN to clear backlogs with international lenders gives the signal that the apex bank is back in trading and business,” he said.
“Apart from bringing back letters of credit, it generally brings back confidence in the traditional market. It restores the confidence of portfolio investors and international airlines. It will also bring foreign direct investments.”
