IMF to Support Nigeria as Naira Appreciates to N663/$

The naira traded at 663.04/dollar at the close of business on Friday after a free fall following the Central Bank of Nigeria’s floating of the national currency against the dollar and other global currencies.

This means that the currency appreciated by about 5.9 per cent within 24 hours from the N702.19/dollar recorded at the close of business on Thursday.

According to data from the FMDQ Securities Exchange, the naira hit N664.04/dollar at the close of trading at the I&E Window on Wednesday and N702.19/dollar on Thursday after the CBN directed Deposit Money Banks to remove the rate cap on the naira at the official Investors’ and Exporters’ Windows of the foreign exchange market.

The CBN’s decision to float the currency was hailed by the organised private sector and economists who said the move would unify the country’s multiple exchange rates and boost the FX market.

The development means buyers and sellers of foreign currency in the official FX markets are now allowed to quote rates they find comfortable in the FX market, as against the previous practice where rates were dictated by the CBN.

While the official rate appreciated, there was depreciation on the parallel market, which opened at N750/dollar and closed at N760/dollar on Friday.

However, in a recent projection, the global investment bank Morgan Stanley, stated that the naira is expected to appreciate at the parallel market rate.

The bank stated this in a publication titled Nigeria Sovereign Credit Strategy ‘No Longer Pumped’.

The report suggests that as more flows are redirected through formal banking channels, the unit will experience appreciation in the near term, leading to a convergence between the I&E rate and the parallel market rate.

June 17, 2023