The naira yesterday appreciated to N1,595.11 per dollar in the official Nigerian Foreign Exchange Market (NAFEM).
Meanwhile, the NAFEM exchange rate surpassed the parallel market exchange rate, which concluded at N1,490 per dollar yesterday.
Data from FMDQ revealed that the indicative exchange rate for NAFEM dropped to N1,595.11 per dollar from N1,609.51 per dollar on Wednesday, signaling a N14.4 appreciation for the naira.
Likewise, the naira experienced an appreciation to N1,490 per dollar in the parallel market compared to N1,610 per dollar on Wednesday.
Consequently, the disparity between the official and parallel market exchange rates shrank to N135.11 per dollar yesterday from 49 kobo per dollar on Wednesday.
Recall that the Central Bank of Nigeria (CBN) issued several foreign exchange guidelines in recent weeks, which preceded the marginal improvement.
The benchmark interest rate, known as the Monetary Policy Rate, was recently raised by 400 basis points by the Monetary Policy Committee on Tuesday, climbing from 18.75 percent in July 2023 to 22.75 percent.
Additionally, the Cash Reserve Ratio was increased from 32.5 percent to 45.0%, while the Liquidity Ratio remained at 30%, and adjustments were made to the asymmetric corridor surrounding the MPR to +100/-700 basis points from +100/-300 basis points.
Government officials have consistently asserted that the naira is presently undervalued.
Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said the naira is undervalued largely due to distortions by perpetrators in the foreign exchange market.
“As and when we come up with these distortions, we will take them off and throw them away and where there are distortions that come about as a result of bad behaviour, we will ensure that those who do it will face the music as a deterrent to ensure that others in future do not take that route,” Cardoso said.
He elaborated further, stating that such offenders cause confusion within the FX market.