Naira has maintained its gain from Wednesday, when it appreciated to N890 per dollar at the parallel market, gaining over N70 – buoyed by the news of the Nigerian National Petroleum Company Limited (NNPCL) securing a $3bn emergency loan from Afreximbank to boost the currency.
The naira traded at N769 in the parallel market and N860/$1 on Thursday as of writing time, according to data from online forex rates aggregator, AbokiFX. The figure shows further gain amid efforts by the Central Bank of Nigeria (CBN) to stabilize the free-falling currency.
The CBN governor Folashodun Shonubi, announced on Tuesday that the apex bank has the approval of the president to implement new measures that will stabilize the fluctuating forex market.
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That was followed by the announcement that the NNPCL has secured the $3bn loan.
Otega Ogra, senior special assistant to President Bola Tinubu on Digital/New Media explained on Thursday that the “loan will assist NNPC Limited in settling taxes and royalties in advance. It will also equip the Federal Government with the necessary dollar liquidity to stabilize the Naira, with limited risk.”
Naira’s poor performance in the FX market created a room for potential increase in petrol pump prices. Oil marketers had warned that fuel prices will rise to N720 per liter in the coming weeks if the naira keeps falling.
That would add further pain to Nigerians, who are already groaning over the high cost of living induced by the current price of petrol.
Nigeria’s headline inflation rate for July 2023 surged by 129 basis points (bps), reaching 24.08 percent on a year-on-year (YoY) basis, according to data from the National Bureau of Statistics (NBS). This marked an increase from the 22.79 percent YoY recorded in June 2023.
In an effort to ameliorate the suffering caused by high dollar rates and in a bid to avert a strike by the Nigerian Labour Congress – who had vowed to embark on a nationwide strike if fuel prices are further increased, the NNPCL secured the crude oil repayment loan.
Ogra said a strengthened Naira as a result of this initiative will lead to a reduction in fuel costs.
“This means that if the Naira appreciates in value, the cost of fuel will drop and further increases will be halted,” he said.
Prior to the initiative, there were speculations that the federal government was planning to provide temporary fuel subsidy to keep petrol prices stable.
Ogra said the deregulation policy remains unchanged. He indicated that the government’s focus is to strengthen the naira, because “a stronger naira will result in lower prices from the current level, making subsidies unnecessary.”
Before now, the naira was in a race to hit N1,000/$1, trading at around N950/$1 at the parallel market, as the illiquidity of the Investor & Exporter window drove buyers away from the banks.