Nigerian Naira appreciates amid Central Bank’s forex initiative and expected foreign currency influx

In a significant turn of events, the Nigerian Naira has appreciated against the United States dollar, trading below N1,000 for the first time in 44 days across all markets, including the black market. As of Thursday, the Naira traded at N995 against the US dollar, marking an appreciation by N118 within hours.

This substantial increase is largely attributed to the Central Bank of Nigeria’s (CBN) “Settlement of Matured FX Forwards by CBN” initiative that cleared forex obligation backlogs to international entities like Citi Bank on Wednesday. This initiative also extends to commercial banks and airlines, as part of a broader effort to stabilize the nation’s currency.

In addition to CBN’s initiative, Bureau de Change dealers under ABCON’s “No more N1k” initiative are also contributing efforts to stabilize the Naira in the black market.

Further boosting expectations for the country’s financial stability is Finance Minister Wale Edun’s announcement of a forthcoming $10 billion foreign currency influx aimed at mitigating the ongoing forex crisis. This projected inflow is expected to catalyze further gains for the Naira.

Supporting this positive outlook, JP Morgan predicts a rate of N850 to a dollar by year-end. Similarly, according to Legit.ng, the federal government expects an exchange rate of N650 to N750 by December 2023. As such, the dollar now trades below N1,000 in the Peer to Peer (P2P) segment used by fintech apps and cryptocurrency platforms, marking a notable shift in the country’s financial landscape.

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