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Business News of Monday, 13 November 2023


Naira to rise against dollar as CBN intensifies forex solutions to ease pressure, gets support

Naira and dollar Naira and dollar

Nigerian currency, the naira is set to rebound in the coming days as the Central Bank of Nigeria (CBN) moves to clear FX forward contract.

An FX forward contract is a bilateral agreement where one party (the seller) agrees to sell FX to another party (the buyer) at a predetermined settlement date in the future and at a strike price, which is fixed at the time of entering into the contract.

It is also a binding contract in the FX market that locks in the exchange rate for the purchase or sale of a currency on a future date.

Naira set to bounce back

ThisDay reports that apex bank has promised to clear a substantial amount of the outstanding FX forward obligations before the end of November 2023.

The move it is believe will ushered in improved FX liquidity in the market and help ease the pressure on naira.

A top bank official quoted in the report expressed optimism that in the coming days, the naira exchange rate would improve.

The official said: “For smaller Nigerian banks and foreign banks, the Central Bank of Nigeria (CBN) has approved clearance for at least 80% of their FX forwards.

"However, larger Nigerian banks have only recently begun the clearance process, with the central bank having cleared approximately five to 10% of their FX forwards.

"The current plan is to clear 30% for these big banks in the next two weeks, injecting liquidity into the system.

"There is also a scheme of arrangement in place to address the remaining balance. Realistically, the naira's trading range should be between N700 and N800/$ if not for the speculative activities affecting the currency." also reported that the Kingdom's Crown Prince, Mohammed Bin Salman has promised to help make available enough dollars exchange to fix Nigeria's forex scarcity.

These two events is expected to help naira improve in the coming days.

CBN forex decision impact

The development helped the naira recover some of its lost value against the dollar before the momentum wane.

Although there was improvement at the end of trading on Friday, November 10, 2023 as the Naira closed at N780.14/$1 in the official market after falling to a record low of N996/$.