The naira, Nigeria’s legal tender, which traded with the dollar at a peak rate of 710 naira, recorded a 4.5% increase in value in one day as demand for the greenback wanes on the parallel market, commonly known as the black market.

After being traded on Tuesday, the naira closed at 660 naira to the dollar against 690 naira/$ closed Monday on the parallel market.

The appreciation of the naira was the result of weak demand for dollars by end users, a trader told BusinessDay.

In the official market, also known as the Investors and Exporters (I&E) Foreign Exchange Window, the naira strengthened by 0.42%, with the dollar quoted at 430.67 naira on Tuesday against 428.88 naira/ $ at Monday’s close, FMDQ data showed.

Most traders who participated in the FX auction held bids between N415.00 (low) and N444.00 (high) per dollar.

Daily turnover in the foreign exchange market fell 163.28% on Tuesday to $158.68 million, from $60.27 million recorded on Monday, according to FMDQ data.

According to the FSDH macroeconomic report, demand pressure and limited foreign exchange inflows triggered a depreciation of the naira, increasing the exchange rate premium.

Other factors responsible for the naira’s freefall include rising strong dollar, import demand, oil theft, fuel subsidies, currency speculation, record money supply and low productivity.

The Central Bank of Nigeria (CBN) had applied all necessary measures, including interventions in critical sectors of the economy, to ensure the stability of the naira.

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“We recognize some CBN interventions as they show signs of support for currency inflows, particularly the ‘Race to US$200 Billion in Currency Repatriation (RT200 FX Program)’ initiative. But then the results are far from matching the demand for foreign currency. Indeed, there is still no clear and effective footprint to stimulate the expansion of production in all sectors for exports,” the report said.

On Tuesday, in the money market, the overnight rate (O/N) rose 4.50% to close at 15.00% from the last close of 10.50% on Monday, and the Open Repo rate (OPR) rose 4.33% to close at 14.33% against 10.00% the day before, notes an FSDH report.

The Nigerian secondary treasury market closed on a flat note, with the average yield on the curve closing at 7.69%. The average yield on short, medium and long maturities remained unchanged at 11.19%, 5.86% and 6.32%, respectively. NTB 11-Aug-22 (-1 basis point) maturing bill saw mild buying interest.