The official market saw a decline in the value of the Nigerian currency, the Naira, on Friday, with the currency trading at ₦1,483.99 to the United States dollar.
According to data from the FMDQ Exchange, the Naira lost ₦2.50, representing a 0.16% decrease compared to the previous trading day.
However, the volume of currency traded increased, reaching $269.27 million on Friday, up from $213.31 million on Thursday.
At the Investor’s and Exporter’s window, the Naira traded within the range of ₦1,507.00 and ₦1,399.00 against the dollar.
Naija News reports that the Central Bank of Nigeria (CBN) is using various tools to influence the value of the naira.
This involves controlling the money supply in the economy.
The CBN can raise interest rates to reduce the money supply and fight inflation, which can put downward pressure on the naira’s exchange rate.
Conversely, they can lower rates to increase the money supply and stimulate economic activity, but this can risk inflation.
One of these tools also includes foreign exchange intervention. The apex bank can directly buy or sell naira in the foreign exchange market to influence its exchange rate. Buying naira would strengthen it, while selling it would weaken it.
This approach can be expensive and is typically used in short bursts.
The CBN may have a target exchange rate or band for the naira. This helps provide stability and predictability for businesses and investors.
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