The Nigerian naira showed resilience over the weekend, rebounding against the US dollar and breaking through the N1,300 resistance level at the parallel market. The currency settled at N1270-75 against the dollar, marking a significant 10% increase from its previous rate of N1,400 at the close of Friday’s trading session.
This unexpected surge in the naira’s value coincides with the impending meeting of the US Federal Reserve Bank, where interest rates are under scrutiny. Amidst this backdrop, the naira’s swift recovery highlights its volatility in response to global economic dynamics.
The recent spike in demand for dollars in the parallel market, driven by both banks and end-users, exacerbated by sluggish forex disbursement to Bureau De Change (BDC) operators by the Central Bank of Nigeria (CBN), had initially weakened the naira. Last week, the currency experienced a 23% depreciation against the dollar, marking its worst weekly performance since February.
Currency dealers attribute the naira’s sudden turnaround to the CBN’s gradual increase in forex disbursement, which had initially moderated its bullish momentum. However, the naira’s resilience in the face of these challenges underscores its adaptability to market forces.
As investors and analysts await the outcome of the Fed Reserve meeting, the naira’s fluctuating performance serves as a barometer for Nigeria’s economic stability amidst global uncertainties.
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