Naira Records Gain Against US Dollar As FX Turnover Increases

The naira has appreciated against the US Dollar.

The Publisher Nigeria reports that Nigeria’s official legal tender, the naira recorded its first gain against the dollar on the foreign exchange market on Tuesday, August 27, 2024, as FX transaction turnover increased.

The FMDQ data showed that the naira gained N2.33 at N1594.27 per dollar on Tuesday from N1596.60 exchanged on Monday but remained flat at N1620 per dollar in the black market on Tuesday, the same as on Monday, August 26, 2024.

This comes as foreign exchange transaction turnover increased to $156.94 million on Tuesday from $102.93 million on Monday.

On Monday, the Central Bank of Nigeria raised the Standing Lending Facility rate to 31.75 percent to boost stability within the financial sector.

CBN disclosed this in a circular issued on Monday by its director, Financial Market Department, Omolara Duke, lifting the suspension on SLF.

The SDF rate, applicable to deposits made by banks at the CBN, has been increased to 25.75 percent. The policy is expected to take effect immediately.

The decision to raise the SLF rate was taken during the 296th Monetary Policy Committee (MPC) meeting held in July 2024, where key adjustments to interest rate policies were approved.

Accordingly, the CBN revised the Asymmetric Corridor around the Monetary Policy Rate (MPR) from +100/-300 basis points (bps) to +500/-100 bps.

This is to discourage banks from holding excess liquidity at the central bank and to promote increased lending activities.

“Consequently, the suspension of the Standing Lending Facility (SLF) is hereby lifted and Authorised Dealers should send their request for SLF through the Scripless Securities Settlement System (S4) within the operating hours of 5.00 pm to 6.30 pm.

“To this end, Authorised Dealers are: Permitted to access the SLF at 31.75 percent; Permitted to access ILF to avoid system gridlock at no cost if repaid the same day; the 5.00 percent penalty (as stated in the S4 business rules) is retained, for participants that do not settle their ILF, which the system will convert to SLF at 36.75 percent; Collateral execution (the rediscounting of instruments pledged by participants at the penal rate by CBN) is reintroduced as stipulated in the approved repo guidelines”, the bank stated.