On Friday, speculations that the naira had appreciated against the dollar on the official and parallel markets trended. The naira had reportedly gained one of its highest strengths since September, when a dollar crossed to N1000.

FIJ spoke with financial analysts and parallel market traders to understand what factors could have been responsible for the naira’s appreciation.

Samuel Ohida, a financial analyst, told FIJ that the naira was currently sold at N780 on the exchange floor and N900 on the black market.

ANALYSIS: Naira Is 1,034 Per Dollar, but Not at CBN. Does Nigeria Still Have a Parallel Market?

He said the strength gained by the naira meant that the dollar was becoming more available.

“For a while, the CBN had issues with clearing the backlog of demand for significant currencies, including the USD,” he told FIJ.

“This situation caused a level of scarcity and depleted Nigeria’s foreign reserves because the Central Bank couldn’t meet the demand of dollars needed by commercial banks and Nigerians.

“The apex bank does not also have good information about how much dollar is in circulation in the country, but somehow the parallel market traders have this information and can push the price.

“The reason we have had a bit of strength in the naira in the last 24 hours is because the CBN has been able to clear the backlog of some mature foreign currencies, which has affected the flow of the dollar.

“This means that they have been able to inject some dollars into the economy, creating an equilibrium of balance between demand and supply.

“Yesterday, the naira fluctuated between N900 and N1200 on the black market, while the official rate was between N780 and N806.

“This morning, we have it at N806 for the official rate and N950 – N1100 on the black market.”

READ ALSO: Free Float of Naira. What Does It Mean?

‘PEOPLE WHO HAVE THE DOLLAR ARE PANIC-SELLING’

Another parallel market trader told FIJ that the supply of the dollar was gradually increasing, hence a rise in the value of the naira. He said that earlier this week the dollar was sold at N1350.

“The naira is indeed appreciating, but the black market selling it at N806 is far-fetched because today it is still sold at N1150,” he told FIJ on Saturday.

“A reason for the naira’s fight back is that some of the people holding the dollars are panic-selling. They are releasing the USD in their care.

“The USD is now more available in the market, as hoarders and the government are releasing it.”

He said that different speculators have their reasons for the dollar’s depreciation.

“Some believe that it is due to USDT (Binance), which means pair-to-pair traders can set their individual prices for the dollar and sell cheaper,” he said.

“However, I believe it is because buyers are not buying for N1300 – N1350. Demand is dropping drastically and supply is also going up, which is forcing availability.

“But the appreciation of the naira has nothing to do with an improved economy or an improvement in the standard of living.

“It is more about the government pumping money into FX.”