The Nigerian naira gained ground against the US dollar across various foreign exchange markets this week, buoyed by the Central Bank of Nigeria’s (CBN) intervention and growing momentum behind a proposed dedollarization plan.
CBN Intervention Boosts Naira
The CBN injected a significant amount of US dollars into the market, selling $30.5 million to commercial banks at rates ranging from N1,520 to N1,547 per dollar. This move aimed to alleviate dollar scarcity and stabilize the currency.
Dedollarization Gains Traction
A bill seeking to prohibit the use of foreign currencies for domestic transactions has been introduced in the Senate. The proposed legislation, championed by Senator Ned Nwoko, aims to bolster the naira’s value and reduce the country’s reliance on foreign currencies.
While the dedollarization plan has garnered support from many Nigerians, it has also raised concerns among businesses that rely on foreign currency transactions. Some businesses have expressed fears that the move could hinder their operations and limit their access to foreign capital.
Market Outlook
The naira’s recent appreciation has been a positive development, but challenges persist. The country’s economic vulnerabilities, including high inflation and low foreign exchange reserves, could impact the currency’s long-term stability.
As the dedollarization debate intensifies, market participants will closely monitor the CBN’s policy decisions and the government’s commitment to economic reforms.
