The naira gained significantly against the United States dollar in the official Nigerian foreign exchange market, closing the month at 1,386.55/$.
This indicates a 2.47 per cent appreciation.
According to data from the Central Bank of Nigeria, the Nigerian foreign exchange market rate, which is the official rate used for corporate international payments and eligible transactions such as medical needs and school fees, strengthened from a weekly high of 1,422.07/$ on the previous Friday, 23 January, to close the month at 1,386.55/$ last Friday, January 31.
The data shows that the naira recorded a consistent upward trend starting from 26 January, moving from 1,418.95 per dollar to its strongest point of 1,386.55 per dollar by Friday. Although the market saw a highest rate of 1,423.50/$ early in the week, the gap between the highest and lowest daily rates narrowed towards the end of the month, indicating a period of relative stability.
Analysts say if the trend continues, it could help to dampen inflationary pressures on imported commodities.
Meanwhile, Bloomberg reports that concerns about the new tax laws are driving United States dollar demand in the parallel market, with a bureau de change operator, Abubakar Muhammed, telling the news outlet, that “Individuals are converting naira to dollars to secure their assets or to avert scrutiny from tax agents. We may see the dollar demand start to wane and the rate appreciate gradually when there is more clarity around the tax.”
Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, also said, “People are afraid that tax authorities could actually lock their accounts. In the interim, what they are doing is they are just buying United States dollars and keeping them aside.”
