The current exchange rate between the naira and the dollar shows that the Naira appreciates more. The dollar was significantly at 10.71 per cent on Monday, but before the end of Monday, it rose to ₦1,339.33 per dollar on the Nigerian Foreign Exchange Market (NAFEM) site.
This new appreciation rate has marked the highest closing rate for the dollar and naira since April 26th, when the exchange rate was ₦1,339.23 for one dollar, according to the analysis from FMDQ.
This current appreciation is also the biggest currency appreciation in the past two months since May 20, when it was at 12.84%.
However, low demand attracts higher value. On the 24th of May, 2024, the dollar exchange rate was at ₦1,482.81 per dollar, with just a slight increase of 0.19%. After the naria snapped its four-day winning streak, the marginal appreciation came. It was also reported that the FX turnover on Friday was significantly higher at the rate of $556.25 million, whose total increase was 231.99%.
The massive increase in FX turnover was likely attributed to the CBN’s aggressive liquidity management strategy, which raised a substantial ₦1.16 trillion from the OMO bilk auction.
The OMO move is part of the CBN’s efforts to control inflationary pressure and stabilise the naira amid the ongoing economic crisis.
In the meantime, the FX turnover has depreciated sharply by 67.50%, to $180.8 million on Monday. The sudden substantial drop in FX turnover has lowered dollar demand, which is a plausible factor contributing to the appreciation of the naira.
It has also been noted that when fewer dollars are bought, demand decreases, leading to a stronger dollar.
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