The Nigerian naira strengthened against the US dollar in various foreign exchange markets this week, supported by the Central Bank of Nigeria’s (CBN) intervention and increasing momentum for a proposed dedollarization plan.
The CBN sold $30.5 million to commercial banks at values ranging from N1,520 to N1,547 per dollar, injecting a sizable quantity of US dollars into the market. The goal of this action was to stabilise the dollar and lessen its shortage.
Dedollarization Gains Traction
A bill seeking to prohibit the use of foreign currencies for domestic transactions has been introduced in the Senate. The proposed legislation, championed by Senator Ned Nwoko, aims to bolster the naira’s value and reduce the country’s reliance on foreign currencies.
While the dedollarization plan has garnered support from many Nigerians, it has also raised concerns among businesses that rely on foreign currency transactions. Some businesses have expressed fears that the move could hinder their operations and limit their access to foreign capital.
Market Outlook
The naira’s recent appreciation has been a positive development, but challenges persist. The country’s economic vulnerabilities, including high inflation and low foreign exchange reserves, could impact the currency’s long-term stability.
Market players will keep a careful eye on the CBN’s policy choices and the government’s commitment to economic reforms as the dedollarization discussion heats up.
