On the parallel market as speculators sell Naira strengthens to N1400/$
Operators in the parallel market are currently quoting a buy price of N1400/$1 for individuals holding dollars and looking to sell, indicating a notable strengthening of the naira.
According to checks conducted by Nairametrics, the exchange rate has been on the rise recently as speculators begin to offload their stockpile of dollars due to diminishing demand.
Several sources operating in the parallel market have disclosed that the naira has appreciated from around N1600/$1, its closing rate yesterday, to N1500/$1 (some quoted N1550/$1) if they are selling to customers.
However, they are buying at N1400/$1, allowing them to earn a spread of N100/$1.
A trader named Musa, speaking to Nairametrics, expressed satisfaction with this development, stating that a stronger naira also benefits their business.
Meanwhile, the official market exchange rate dropped to N1,560/$1 on Tuesday, marking the strongest performance of the naira since March 4th, when it closed at N1534/$1.
Key points to note
- The Central Bank recently announced the date for its upcoming Monetary Policy Committee (MPC) meeting, where it will deliberate whether to maintain the Monetary Policy Rate (MPR) or implement further adjustments. At its last meeting, the apex bank adopted a hawkish stance on interest rates, increasing the MPR by 400 basis points to 22.75%, the highest single increase on record.
- The recent gains of the naira may be linked to the foreign investors' interest in the Central Bank's Open Market Operations (OMO) auctions and Nigeria's Treasury bills. The apex bank had previously reported that foreign investors dominated these auctions, with approximately 75% of subscribers being foreigners.
- Additionally, the Central Bank reported a significant inflow of foreign exchange in the past month, with remittances from Nigeria's diaspora reaching $1.3 billion in February, a fourfold increase from the $300 million received in the previous month.
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