AGS NEWS – The Nigerian Naira experienced a notable recovery against the US Dollar on Wednesday across both official and parallel markets.

This surge follows the announcement by the Central Bank of Nigeria (CBN) regarding the complete resolution of all valid foreign exchange backlogs, which was a significant commitment by the CBN governor, Mr. Olayemi Cardoso, to address an inherited backlog totaling $7 billion.

According to Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications at the CBN, this announcement was made in Abuja, highlighting that the central bank had recently cleared $1.5 billion from these backlogs.

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As per data gathered from the FMDQ Securities Exchange, the Naira closed trading at 1,410/dollar in the parallel market and N1,492 at the official Nigerian Autonomous Foreign Exchange Market on Wednesday.

This represents a substantial appreciation of N68 or 4.5% at the official market and a gain of 13.5% or N190 at the parallel market compared to the previous day’s rates.

The recent strengthening of the Naira can be attributed to various factors including decreased demand for the Dollar due to CBN interventions and clampdowns on illegal currency trading activities. Speculators are reported to be offloading their Dollar stocks amidst tightening regulations by the CBN.

Currency traders in major cities like Abuja and Lagos have noted a decline in Dollar demand, resulting in a downward pressure on its value.

Some traders mentioned selling the Dollar at rates lower than previous levels, with expectations that the Naira might further appreciate if current trends persist.

The increase in daily foreign exchange turnover and a surge in Nigeria’s external reserves have contributed to the Naira’s positive performance. Recent reforms by the CBN aimed at enhancing transparency and stability in the foreign exchange market have also played a role.

The successful resolution of the foreign exchange backlog by the CBN is seen as a significant milestone in restoring confidence in the Nigerian economy.

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It aligns with the broader strategy outlined during the Monetary Policy Committee meeting to stabilize the exchange rate, curb inflation, and stimulate economic growth.

some banks have implemented stricter measures requiring customers to submit tax clearance certificates for the past three years when applying for foreign exchange transactions, emphasizing compliance with tax obligations.

In light of these developments, global investment bank Goldman Sachs has revised its outlook, predicting a further appreciation of the Naira to N1200 per US Dollar within twelve months.

This comes amid ongoing efforts by the Nigerian government and the CBN to address the country’s foreign exchange challenges through various monetary policies and regulatory interventions.