Nigeria’s naira jumped against the dollar on the parallel market and on crypto exchanges on Friday, a day after authorities said they took steps to clear a backlog of matured foreign-currency forward contracts that have hampered dollar inflows. The local currency soared 10% to 1,035 a dollar on the parallel market, according to Abubakar Mohammed, chief executive officer of Forward Marketing Bureau de Change Ltd., which compiles exchange-rate data. It was quoted at 819.10 on Binance Holdings Ltd.’s platform, a 28% gain from the previous day, as of 2:15 p.m. local time.
The naira’s recent depreciation has been driven by a number of factors, including a shortage of dollars in the official market, rising inflation, and concerns about the country’s economic outlook. The Central Bank of Nigeria has taken a number of steps to try to stabilize the currency, including raising interest rates and restricting access to foreign exchange for certain imports.
However, these measures have not been enough to prevent the naira from falling sharply in recent months. The currency has lost more than 50% of its value against the dollar since the start of the year.
The naira’s rebound on Friday is a welcome sign for businesses and consumers in Nigeria. It could help to reduce inflation and boost economic activity. However, it remains to be seen whether the currency’s gains can be sustained in the long term.
The naira’s rebound on Friday is a significant development, as it is the first time that the currency has traded below 1,000 naira per dollar on the parallel market since September. This suggests that the Central Bank of Nigeria’s recent efforts to stabilize the currency may be starting to pay off.
The clearing of the backlog of matured foreign-currency forward contracts is likely to have played a major role in the naira’s rebound. These contracts had been weighing on the currency for some time, as they had led to a shortage of dollars in the official market.
The naira’s rebound is also likely to be due to increased demand for the currency from businesses and consumers. With the currency trading at a more attractive level, businesses are more likely to import goods and consumers are more likely to spend money.
However, it is important to note that the naira’s rebound is still in its early stages. It remains to be seen whether the currency’s gains can be sustained in the long term. The Central Bank of Nigeria will need to continue to implement sound economic policies in order to ensure that the naira remains stable.