Official exchange rate closes at N1609.51/$1 against dollar after CBN’s policy rate hike

The official exchange rate between the naira and the US dollar on Wednesday, February 28th, 2024, appreciated slightly by 0.4% to N1609.51 per US dollar as against the N1615 to a dollar recorded the previous day, according to data published on the FMDQ where forex is officially sold. 

Simultaneously, the dollar also experienced a 1.24% gain at the parallel market.  

Market analysts attribute the movement to potential reactions following a recent media briefing by the CBN Governor, Olayemi Cardoso, regarding the CBN’s efforts aimed at stabilizing the Naira and curbing inflation. 

Recent measures  

During the briefing, it was disclosed that the Monetary Policy Committee had increased the monetary policy rate to 22.75% from 18.75%. This adjustment was made with the intention of decelerating the pace of inflation. 

Furthermore, Cardoso emphasized that the MPC extensively discussed various distortions within the foreign exchange market, including the activities of speculators, which were exerting upward pressure on the exchange rate and contributing to inflationary pressures. 

Cardoso expressed confidence that the ongoing reforms within the foreign exchange market would produce the desired outcomes in the short to medium term.  

  • “These reforms encompass initiatives such as the unification of the foreign exchange market, the promotion of a willing buyer-willing seller market, the elimination of limits on margins for International Money Transfer Operator (IMTO) remittances, the implementation of a two-way quote system, and comprehensive reforms within the Bureau De Change (BDC) segment aimed at restoring stability, enhancing transparency, boosting supply, and fostering price discovery within the Nigeria Autonomous Foreign Exchange Market (NAFEM),” he said. 

Foreign exchange rates in various markets 

Data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official platform for foreign exchange trading, revealed a marginal appreciation of the domestic currency by 0.4%, with the Naira concluding the day at N1,609.51 per dollar.   

  • This represents an N6.4 gain or a 0.4% increase in the local currency compared to the N1,615 closed on Tuesday.   
  • The intraday high recorded a record high of N1660/$1, while the intraday low was N1401/$1, representing a spread of N259/$1.   
  • According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $119.14 million, representing a 22.72% increase compared to the previous day.   
  • Similarly, the Naira appreciated against dollar in the parallel forex market, where forex is unofficially traded, with the exchange rate quoted at N1,610/$1, reflecting a 1.24% increase from the N1,630 rate it closed at the previous day.    

The Great British Pound (GBP) stood at £1/N1960, an increase from £1/N2,000 recorded the previous day, this marks an increase of 2.56% compared to the rate recorded the previous day.  

  • However, the Naira depreciated against the Euro by 2.30%, closing at N1740/EUR1 compared to N1700/EUR1 reported the previous day.  

What you should know 

Nairametrics reported that Binance, a widely used crypt exchange with over 170 million users worldwide disabled its peer-to-peer feature for Nigerian users. 

Known as the P2P market, the network lets users, buyers, and sellers transact without the intervention of a third party. It gained popularity among Nigerians in 2021 after former president Buhari’s administration outlawed the country’s vibrant Crypto industry. 

Following the swift depreciation of the naira, which contributed to inflation reaching an almost three-decade high of 29.9%, the FG shifted its attention to websites that offered cryptocurrency services. These websites have become a viable option for engaging in trade and setting an informal value for the naira. 

Concerns were expressed by the Central Bank of Nigeria regarding the $26 billion that came through Binance Nigeria from “unidentified sources” in the previous year. 

  • “In the case of Binance, $26 billion has passed through Binance Nigeria in the last year alone from sources and users who we cannot adequately identify,” stated CBN Chief Olayemi Cardoso. “. 

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