Naira on the Rise: 3 Reasons Why This is HUGE for Nigeria’s Economy (2024).
The Naira continued its upward trend against the dollar in the official market on Monday, marking the third consecutive gain in the new year.
The currency surged by 1.45%, closing at N856.57 per dollar according to data from NAFEM, the official forex trading platform.
Compared to the previous day’s close at N869.13, this shows a significant N12.56 gain in the local currency. At the parallel forex market, where unofficial trading occurs, the Naira also saw appreciation, quoting an exchange rate of N1245/$1, a 0.80% increase from the prior day.
Meanwhile, peer-to-peer traders set the rate at approximately N1235.17/$1.
This positive trend signals an improving forex market, fueled by a recent influx of financial support.
Here are 3 key takeaways:
1. Naira’s Upward Climb:
- The domestic currency appreciated a significant 1.45% at the official market, closing at N856.57 per dollar.
- The appreciation extended to the parallel market, with an 0.8% gain, pushing the exchange rate closer to N1245/$1.
- Compared to last week’s N869.13, the naira has gained a total of N12.56, indicating a growing momentum.
2. Afreximbank’s Pivotal Move:
- A crucial factor driving the naira’s rise is the $3.3 billion foreign exchange (FX) support facility recently provided by Afreximbank.
- This strategic agreement aims to combat Nigeria’s forex shortage and inject much-needed liquidity into the NAFEM window.
- The first tranche of $2.25 billion has already been deposited, promising immediate relief to the forex market.
3. Collaborative Effort for Economic Stability:
The success of this initiative shines light on the collaborative efforts of several key players:
- Afreximbank as the lead arranger.
- UBA as the local arranger and onshore depository bank.
- NNPC as the principal financier.
- Oil trading firms like Sahara Energy, Vitol, Oando, and Gunvor as sub-lenders and contributors.
This united front demonstrates a strong commitment to tackling Nigeria’s economic challenges.
Looking Ahead:
The recent developments and collaborative efforts offer promising signs for the naira’s stability. While challenges remain, the influx of funds and coordinated action pave the way for more sustainable forex market conditions in the near future.
