The Centre for Promotion of Private Enterprise, CPPE, has explained why the Naira has recorded massive gains against the dollar in the past weeks.
The Director of CPPE, Muda Yusuf, disclosed this in a statement on Sunday, December 8, as the Naira gained N127 to close at N1,535 per dollar on Friday, December 6, compared to N1,660 against the dollar on Monday, December 2.
Reacting to the gain of the Naira in the FX market, CPPE attributed it to the rise in Nigeria’s external reserves to over $40 billion in the last few days.
Additionally, the economic think tank group said that the CBN’s recent introduction of the Electronic Foreign Exchange Matching System (EFEMS) has contributed to the Naira’s stability in the FX market.
“You can ascribe this to several issues. First, we have seen an improvement in our reserves, which reached the $40bn mark a few weeks ago, and that implies that the CBN has more power to intervene in the market, and in truth, the CBN has been intervening in the market to stabilise the currency.
“I would like to observe that in the last five months or so, we have seen relative stability in the naira exchange rate, which is a welcome development.
“Now, we are beginning to see a strengthening of the currency, so the level of our reserves has contributed to this as it elevates the confidence of foreign investors.
“Then, in the last few months, as a result of reforms in the foreign exchange market, we are seeing a consistent improvement in autonomous foreign exchange inflow in the country, especially from the international money transfer operators.”
Similarly, other experts within the sector have attributed the strengthening of the Naira to the federal government’s raising of $2.2 billion through Eurobond.