The naira defied the strong dollar despite positive macros from the world’s largest economy’s manufacturing data report that it grew in March for the first time since September 2022
Goldman Sachs predicts that in the next 12 months, the value of the naira relative to the dollar will increase to N1,200. On Monday, the naira settled at N1,255/$, up from its February low of N1,915/$ at the Bureau De Change segment of the Nigerian FX market.
Currency traders in Lagos, commonly referred to as bureau de change (BDCs) operators, quoted the buying rate of the dollar at N1,230 and the selling price at N1,250, indicating a profit margin of N20.
Aliyu, a currency trader, noted that while the declining dollar has impacted business, there is a gradual pick-up in business activities.
In the official section of the FX market, the naira experienced a depreciation of 0.69 percent to N1,309.39 per dollar on March 28, down from N1,300.43 per dollar on March 27.
Aminu Gwadabe, the president of the Association of Bureau de Change Operators of Nigeria (ABCON), highlighted on March 31 that the reintroduction of BDCs into the FX market has brought about stability in the exchange rate. He mentioned that this move has eliminated illegal economic activities such as hoarding, rent-seeking, and round-tripping, leading to exchange rate convergence.
Gwadabe further emphasized that the increase in FX inflows through the Central Bank of Nigeria’s (CBN) monetary instruments has bolstered foreign reserves, enabling the apex bank to effectively defend the local currency.
