Nigerian Naira Improves Standing Despite Market Pressures

The Nigerian Naira has shown considerable growth, rising up by 21.8%, a remarkable turnaround in such a single day. The official rate had been 815.32 to the dollar and raised up to 993.82.

However, the exchange volume of the Naira has been a lot lower, dropping by over 66%, now being at the equivalent of $881 million. So, while the positive climb of the Nigerian Naira could be a good sign, it is also indicative of significant volatility in the formal market. This then has implications for how trustworthy the market really is and if forex dealers would want to trade here.

Additionally, the black market has also lowered in value, down by 2.54%, but it is evidently a much smaller drop. This was according to data from the FMDQ, which recently showed a 2.5% increase on Monday. So, it seems as though the Naira managed to correct its own course here, displaying stability for the currency. Hence, the black market seems to be at a more stable level for the Naira currency at this point, unfortunately.

The FSDH states that Tuesday saw a dip down to $74 million in daily forex market trade turnovers. This was a drop down from $88 million on Monday.

The money market was a bit of a different deal altogether. The market for NT-Bills (Nigerian Treasury bills) held at a stable rate. They produced a yield of 7.04% for the more short-term bills, with a 12.96% increase for more long-term bills. We should also note, however, that NT-Bills that are due soon have had some decline in yields. Those bills due in January and April of 2024 have not had much in terms of sales and, therefore, have both dropped in yields by 1%.

The rate overnight rose by 0.52%, finishing up at 16.46%. Meanwhile, the OPR rate has also been increasing, stopping at 15.58%, a 0.28% increase. Finally, there is the OMO bills market, which displayed a decrease in yields of 1 bp, leaving us at a final rate of 12.01%. We will have to keep a close eye on indications of the future of the Naira.