By David Faith Boluwatife (IT Student, Ifotech)
In just one week, the naira rebounded, appreciating by 23.51% against the dollar, closing at N889.86/$ on the official Investors and Exporter window last Friday.
The previous week had witnessed the naira hitting an all-time low of N1,099.05/$, concluding a turbulent period for the national currency.
This marked the lowest closing rate since the Central Bank of Nigeria adopted the I&E window as the official trading channel. On the recent Friday, trading commenced at N901.12/$ before settling at N889.
Despite this improvement, the national currency remains under pressure due to a persistent dollar shortage.
According to the World Bank, the naira has experienced a 41% drop in the official market and a 30% decline in the parallel market since May. This has led to increased inflation, reaching 28.20% by the end of November.
The December edition of the Nigeria Development Update from the World Bank suggests that the naira will eventually recover, emphasizing the importance of a more transparent, market-reflective, and flexible exchange rate.
Experts attribute the naira’s recent volatility to a backlog of FX contracts, with the central bank actively addressing and clearing these contracts.
Governor Olayemi Cardoso acknowledged the need to reduce naira volatility against the dollar, highlighting a comprehensive review of past FX policies to reshape the bank’s strategy.
