Nigeria appreciated further in the official and parallel markets, on Monday after a 12 per cent or N152.23 reduction in the Bureaux de Change (BDC) exchange rate to N1,117.5 per dollar.
Over the weeks, Nigeria’s local currency, the naira has experienced steady appreciation against the dollar, as efforts to boost the economy are intensified by the federal government.
It is pertinent to know some of the factors responsible for the naira’s appreciation, and a few of them are discussed below:
1. CBN sells dollars to BDCs
In a circular on its website yesterday, the Central Bank of Nigeria (CBN) sold dollars to Bureau de Change (BDC) operators.
The apex bank said it would sell $10,000 to each BDCs a1 about N1101 per/$ and also instructed the BDCs to sell at a spread not exceeding 1.5 per cent above the CBN rate.
This approach has the capacity to strengthen the naira against the dollar, making it to be exchanged at N1,117.5 per dollar.
With this, the customers are suspending the decision to buy because based on the CBN announcement, they expect the exchange rate to further go down.
2. Implementation of CBN policies
The policies of the apex bank led by Dr Olayemi Cardoso are responsible for the naira’s steady appreciation according to the affirmation by co-founder, Comercio Partners Limited, an investment bank, Nnamdi Nwizu.
Nwizu said, “Factors behind the appreciation are basically around the various CBN policies implemented and the confidence it is bringing back to the market.
‘’We now have Foreign Portfolio Investment, FPI’s showing interest in Nigeria and have seen the forex backlog cleared by the CBN. Also, we have high-interest rates, making it harder to source naira to buy the dollars. All of these have contributed largely to the naira’s appreciation.”
