As of August 10, 2024, the Naira has gained significantly against the dollar in the official foreign exchange market. According to data from FMDQ, the Naira improved by N42.88 per dollar on a week-to-week basis. This positive change comes following the Central Bank of Nigeria’s (CBN) launch of the Retail Dutch Auction System (RDUS).
Last Friday, August 2, 2024, the Naira was trading at N1617.08 to the dollar. This Friday, it has strengthened to N1574.20 per dollar. This represents a notable weekly gain for the Naira in the official market.
In contrast, the exchange rate in the black market has remained steady. The Naira was trading between N1600 and N1605 per dollar last week and continues to trade at the same range this week. This stability in the black market indicates that the RDUS impact has primarily been felt in the official market.
The RDUS was introduced by the CBN on Wednesday, and it appears to be having a positive effect on the Naira’s value. On the day of the RDUS launch, the CBN sold $876.26 million to 26 banks at a rate of N1495 per dollar. This significant sale was a strategic move aimed at improving the Naira’s position against the dollar.
The Naira’s recent gains come despite ongoing hunger protests that began last week Thursday. These protests have affected economic activities in some states, yet the official exchange rate has still improved. The CBN’s intervention with the RDUS seems to have provided some stability to the currency despite broader economic challenges.
The Naira’s recent appreciation against the dollar highlights the impact of the CBN’s new auction system. While the official rate shows improvement, the black market remains unchanged. This week’s development underscores the influence of central bank policies on currency exchange rates amid ongoing economic and social issues.
