The naira appreciated sharply against the dollar in the peer-to-peer (P2P) market on Friday, gaining N166 in a span of hours, as currency traders re-evaluated their strategies.
The naira peaked at N1279/$ on Thursday evening but settled at N1113/$ by the end of Friday.
Analysts attributed the gains to a number of factors, 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).
Finance Minister Wale Edun had announced that the country was set to receive $10 billion in foreign currency inflows over the next several weeks, which is expected to boost liquidity in the FX market. He also revealed that President Tinubu had signed two executive orders permitting the issuance of domestic financial instruments denominated in foreign currencies and the transfer of all cash outside the banking system into banks.
“The impression among traders especially speculators is that the exchange rate could gain against the dollar in the coming days and as such no avoid losing their shirts, they have to sell lower,” said one analyst.