The naira strengthened to N1,360.15 per dollar at the Nigerian Foreign Exchange Market on Wednesday, recording its strongest closing level since June 16.
According to the Central Bank of Nigeria data, the currency gained N4.85 from Tuesday’s N1,365 close, representing a 0.36 percent gain against the dollar.
The latest gain follows the currency’s improvement that started last week after pressure that sent the naira to N1,398 in the early part of last week. The currency has since recovered N21.35 from the N1,381.50 per dollar recorded on July 17.
The News Chronicle reports that the naira has been mostly stable in August, ranging between N1,365 and N1,360.15 per dollar from the beginning of the month to August 12.
The recent gains come even as the official foreign exchange market turnover has been shrinking. For instance, NFEM turnover was $185 million on August 11, the lowest level in eleven weeks.
Meanwhile, Nigeria’s foreign exchange markets turned out to be relatively busy during the week ended August 7, with a turnover of $3.73 billion.
The central bank has also continued to mop up excess liquidity from the financial system through open market sales and treasury bill offerings in a bid to tighten monetary policy.
The recent gains by the naira are seen as a positive sign for the official market as the stability is required to attract much-needed foreign exchange and ease strain on scarce dollar resources. However, market players will be watching the situation unfold as further movements in the exchange rate along with liquidity, dollar demand and interventions by the CBN will be key factors in the short term.
