The value of the naira against the dollar in the peer-to-peer (P2P) market saw a significant increase on Friday, rising by N166 in just a few hours. Analysts believe this surge was due to traders re-evaluating their strategies. On Thursday, the naira had peaked at N1279/$, but it settled at N1113/$ by the end of Friday.
Several factors contributed to the rise in value, including a lack of buyers at higher levels, expectations of improved liquidity in the foreign exchange market, and a crackdown on illegal currency trading activities by the Central Bank of Nigeria (CBN).
The Finance Minister, Wale Edun, announced that the country was expecting $10 billion in foreign currency inflows over the next few weeks, which is expected to boost liquidity in the FX market. He also revealed that President Tinubu had signed two executive orders that allowed the issuance of domestic financial instruments denominated in foreign currencies and the transfer of all cash outside the banking system into banks.
According to an analyst, “The impression among traders, especially speculators, is that the exchange rate could gain against the dollar in the coming days, and as such, to avoid losing their money, they have to sell at a lower rate.”