Some other countries also make use of the Dollar as their official currency but their value and exchange rates are quite different from that of the United States Dollar.
The code for the United States Dollar is USD. A hundred Cents make up a Dollar, and the symbols of Cent and Dollar respectively are (¢) and $. It is accepted in most parts of the world as a means of payment of services or transactions carried but online and offline. He also cited the fact that PMS imports have remained unchanged as is also the case with the nation’s foreign debts situations that will likely see the dollar go back up in value against the naira.The United States Dollar (USD) is unarguably one of the strongest currencies in the world today.
He reiterated that Nigeria’s import is still more than her export so the nation will still spend more dollars. The current account is talking about import exports, so the strength of the Naira is going to come down to import and export.” He said, “Looking at the current account balance of Nigeria dated up to July 2021. On the flip side, Kalu Aja, Director of Finance and Operations at Community Foundation of Snohomish County, Washington, stated that there was little to back up the long-term recovery of the naira since the current account of the country is still the same. The liquidity in the interbank window has improved so we are seeing the price correction.įurthermore, many Nigerian banks have begun to increase dollar spending limits with a number of notifications to the effect, received by customers of different banks, in the past one week. As a result, whenever an asset has a liquidity premium, even a little increase in liquidity can generate huge price swings.
Hence, he opined that this appreciation in naira can be sustained if the country can tailor its policies towards backward integration.Īt the Nairametrics Clubhouse #OnTheMoney Series hosted by Ugo Obi-Chukwu on Saturday, guest analysts provided insight into factors that must have driven the growth in the exchange rate.Īn analyst at the discussion forum stated that the difference between the Naira at the official window and the parrel market is known as a liquidity premium.
He further stated that Nigerian companies have attracted investments worth $19.1 billion from Foreign Portfolio Investments showing a 113% growth from $8.98 billion in the corresponding period of 2020. As at this time last year price of oil was just $47.88 now it’s trading at almost $83 with resistance at $85,” he said. “Over the past 3 months, we have seen oil prices trade at a 7-year high and a 58% increase in price YOY. He added that an increase in oil price is also a major factor since about 90% of our foreign earnings are gotten from oil. “The bank increased its supply to the I&E and other available outlets (retail FX auction, invisible, SMIS (secondary market intervention sales) which outweighed the demand for dollar and we were able to witness an appreciation in the value of the naira,” he said.
Expert viewsĭumebi Udegbunam, a Fixed Income trader at United Bank for Africa (UBA) told Nairametrics that the sudden appreciation of the naira can be attributed to the continuous intervention by the CBN at the official market. Specifically, workers remittances improved from $4.29 billion recorded in Q2 2020 to $4.91 billion in Q2 2021.
A cursory look at the balance of payment figures from the Central Bank of Nigeria shows that workers remittances into Nigeria increased to its highest level in five quarters, in Q2 2021.