The Special Adviser to the Senate Committee on Banking, Insurance, and Other Financial Institutions, Uche Uwaleke, hailed the developments as a positive shift in sentiment of restored confidence.
Uwaleke noted the naira’s gain was as a result of CBN’s actions, including the clearance of forex backlogs and the resumption of FX sales to qualified BDCs.
Furthermore, Uwaleke highlighted favourable oil prices and increased crude oil production as additional factors supporting the currency appreciation.
“The resumption of FX sales to qualified BDCs has gone a long way in improving liquidity in the retail segment of the forex market which has also reduced speculative activity.
“Crude oil production has increased from 1.5 million barrels per day to 1.65 million barrels per day, now approaching 1.7 million barrels per day, and oil price has also been favourable. So fortunately for Nigeria, oil prices have also been on the rise,” he added.
For his part, the Head of Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle Olubunmi said: “The gain is from a multitude of factors. If we check against all currencies, it seems as if the dollar seems to be losing. So you see that even when comparing the Dollar to Euro or pounds, the dollar is losing.
“Also, as CBN raises rates, some funds that ordinarily would have gone to the black market or speculators are now attracted to high-interest rates. So those funds are leaving the FX market and going into fixed-income securities.
“The CBN has also been able to get more dollar funds if you recall the last two OMOs they did, they got a lot of subscription from foreign investors which has helped.
“Also, the CBN claiming to settle backlog of matured FX signifies to the market that they have dollars.”
He, however, noted that because a significant inflow of FX was from foreign portfolio investors (FPIs), the sustainability of the trend needs to be monitored.
Deji Elumoye and Nume Ekeghe
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