Nigeria’s currency, the Naira advanced 2.2% against the American dollar on Monday at the black market segment of the currency market, exchanging at N440 for the hard currency.
At the previous session on Friday, the U.S. dollar had traded higher at N450.
The Monday gain marked the first major appreciation of the local currency against the dollar at the parallel market since late March, boosted by the resumption of foreign exchange sale by the central bank to Bureaux De Change and banks across the country after days of operational disruption induced by the coronavirus lockdown.
Godwin Emefiele, the Central Bank of Nigeria Governor, had lately warned currency speculators against practices threatening the stability of the foreign exchange market and dissuaded customers from having transactions with street currency traders.
Weeks back, the apex bank recommenced the sale of up to $100 million on a weekly basis to individuals and businesses wanting to make payment for transactions abroad.
“I believe some of the recent pressures on FX is driven by speculators’ panic responses to weakness in dollar earnings, the decline in FX inflow through the I&E window, and suspension of dollar sales to BDCs.
“The imminent resumption of BDC activities is therefore likely to slightly ease naira pressures in the parallel markets, but we believe the underlying medium-term fundamental concerns facing the naira still remain,” said Phillip Anegbe, Team Lead, CardinalStone Research.