The Nigerian naira appreciated moderately against the U.S. dollar on Tuesday, as it continues to experience significant fluctuations in value on the foreign exchange market.
According to Bureau De Change operators in Wuse Zone 4, Abuja, the naira traded at N1,205 to $1 on Tuesday, compared to N1,233 to $1 on Monday. The improvement reflects a slight recovery from all-time lows, though uncertainty persists.
“We sold at N1,205 per $1 on Tuesday, compared to N1,233 on Monday (Christmas Day),” said Dayyabu Mistila, a Bureau De Change operator. “However, we buy at N1,195 per $1 on Tuesday.”
The nascent optimism even extended to peer-to-peer crypto trading platforms. On Binance P2P, the naira traded around N1,181 to $1 on Tuesday amidst thin holiday volume.
Nonetheless, the year-end recovery remains fragile. Prior to the Christmas holiday on Friday, the naira closed at N885.88 to $1 on the official Investors and Exporters FX window, which has witnessed heavy central bank intervention.
The near-term outlook depends significantly on liquidity levels as trading resumes after the festive period. The Central Bank of Nigeria struggles to meet competing demands for hard currency from both legitimate business imports as well as speculative betting against the naira.
CBN Governor Olayemi Cardoso has reaffirmed assurances that monetary authorities expect additional exchange rate improvement by 2024. However, these promises provide little comfort to Nigerian companies and households battered by import costs in the meantime.
The Nigerian naira has undergone severe volatility since the CBN implemented FX reforms last June meant to unify exchange rates. But as 2023 draws to a close, Nigeria remains saddled with multiple complex exchange rates across different channels.
Economists urge the central bank to allow greater flexibility for the naira to find its true level. Nonetheless, the CBN remains committed to incrementally managing its gradual decline for now.