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The Nigerian naira has made a recovery against the US dollar in the parallel market, closing at 850/dollar on Wednesday. This turnaround follows the announcement of the Central Bank of Nigeria's intention to intervene in the foreign exchange market.
In the previous week, the naira was traded at around 950/dollar on the parallel market but improved to 915/dollar on Tuesday. According to Bureau de Change operators, the demand was lower compared to the prior week, with the naira being bought and sold at 830/$ and 850/$. Similarly, other operators at various locations mentioned similar exchange rates.
In the Investor & Exporter forex window, trading began at N781.66/$, peaked at N799.90/$, and concluded at N759.86/$ on Wednesday. The previous day saw it end at N781.30/$. Following a discussion with President Bola Tinubu about efforts to stabilize the naira, Acting Governor of the CBN, Folashodun Shonubi, conveyed the bank's commitment to implementing measures to achieve stability. He noted that the fluctuations in the parallel market were influenced not only by economic factors but also by speculative demand.
An analyst at an investment bank noted that the CBN's announcement prompted caution among speculators, leading many Nigerians abroad to invest in Eurobonds. This, along with Nigerian companies issuing dollar-denominated bonds, is causing more people to choose saving their dollar income in dollars rather than converting it to naira. To aid naira stabilization, the Nigerian National Petroleum Limited secured a $3 billion emergency loan.
Opinions on whether this amount will sufficiently stabilize the local currency are divided among analysts.