Nigeria’s local currency a fortnight ago was very weak against the dollar, exchanging above N400 per dollar, the worst level it has even get in history.
However, the naira has been appreciating recently and it all boils down to these three main reasons:
1. Government’s stance on Devaluation
The Muhammadu Buhari government has refused to devalue the naira, despite calls for devaluation from several local and foreign bodies. The Naira staged a major comeback after President Buhari reiterated his stance on devaluation a week ago.
2. Dollar demand is easing
Another reason the naira is appreciating is because the demand for dollar in the country is easing. Several organizations are starting to look inwards for raw materials and less people are buying dollars in panic. The rush for dollar has ebbed as traders now convinced there won’t be a devaluation in the coming weeks. As a result those hoarding the currency are now selling.
3. BDCs are cooperating with the CBN
It’s not guaranteed the currency will appreciate back to its 197/$ ‘CBN’ rate in the coming weeks as negativity still persist. However the general feeling is positive and the outlook seems fair.