After the central bank refuted a widely circulated claim about currency redenomination, the Nigerian naira partially recovered from the significant daily loss it had suffered earlier in the week.
The Nigerian Naira strengthened 17.96% to close at N815.32 on the Nigerian Autonomous Foreign Exchange Market (NAFEM), indicating good trading activity versus the US dollar in the foreign exchange market. The exchange rate increased because demand was lower than it had been the day before.
The improvement, according to FX experts at Cowry Asset Limited, occurs as the federal government lays out a plan to stabilize the value of the national currency and raise the degree of FX market liquidity. The CBN said there are no plans to redenominate Nigeria's legal tender, the Naira. CBN's Director of Corporate Communications Department, Isa AbdulMumim, made this known in a statement on Tuesday in Abuja.
"The attention of the CBN has been drawn to the wide circulation of a text message suggesting that the apex bank plans to redenominate the country's legal tender, the Naira, with effect from January 2024.
However, analysts appear to be discounting the statement, saying the apex bank is known for first-instance denial on most of the policies it plans to implement.
"Whilst the apex bank may be considering reforms, such are subject to laid down procedure in line with provisions of the CBN Act"
in the parallel market, the Naira's performance was positive as it appreciated further at the close of trading on Tuesday by 0.34%. The local currency closed at N1,176 per dollar from the previous sessions' N1,180 per dollar.
Based on the pattern observed exchange rate convergence could be lost should spot rates diverge significantly. At $33.33 billion, Nigeria's gross external reserves remain tight, covering 7 months of imports.
In the commodity market, crude oil prices rallied due to the ongoing war in the Middle East. Brent crude was up 0.75% to $87 per barrel, while the West Texas Intermediate (WTI) crude oil gained 0.87% to $83.03 per barrel.
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