Dollar Crashes Massively Against Naira After FG’s Announcement Of $10bn FX Inflows

The Nigerian naira has appreciated by N166 to the dollar in the parallel market on Friday night, as currency traders reevaluate their strategies.

Some dealers in Lagos said the naira, which peaked at N1,279/$1 on Thursday evening, settled at N1,113/$1 as of Friday evening

According to reports from the markets, the gains may be due to a lack of buyers as many declined to pay around N1,300/$1, sensing a potential strengthening of the local currency.

This may not be unconnected with the information that the Federal Government has decided to convert about $7 billion of Nigeria’s dividends from the Nigerian Liquefied Natural Gas (NLNG) to a loan to boost foreign currency liquidity in the Nigerian economy and strengthen the troubled forex market.

A top government official was quoted on Thursday to have said that as the Federal Government expedited action to securitise the NLNG dividends, it was also expecting about $7 billion from a consortium led by Standard Chartered Bank.

Meanwhile, the Minister of Finance, Wale Edun, said the country was set to receive $10 billion in foreign currency inflows over the next several weeks to help improve liquidity in the foreign exchange market, which has stifled growth in Africa’s largest economy.

In addition, Edun said President Bola Tinubu signed two executive orders permitting the issuance of domestic financial instruments denominated in foreign currencies as well as the transfer of all cash outside the banking system into banks.

This created an impression among traders, speculators, that the exchange rate could gain against the dollar in the coming days.

The minister’s remarks were made just after President Tinubu gave the assurance that he would clear the backlog and that he had taken action to address liquidity in the foreign exchange market.

He added that every transaction in the foreign exchange market, from the official to the money changers, where large amounts of arbitrage have regularly happened, would be closely watched and those who transgress would be found out and dealt with.