The Naira strengthened against the dollar at the parallel market, gaining N1 on Wednesday afternoon as it traded for N225 against the dollar after previously trading for N226 against the dollar. At the official interbank rate, the Naira also appreciated in value as it gained N0.02 to trade at N196.98 as against its previous value of N197.

There has been continuous pressure on the currency as the fall in oil prices and the imbalance between increasing demand for foreign currency and the foreign exchange available, continued to intensify. However with this latest development, traders at the parallel market are beginning to speculate that the Naira might experience further appreciation, considering the recent rise of oil prices at the international market. The price of oil has risen to 50.15 dollars at the international market.

Last week the Naira depreciated at the parallel market, trading at N225.5 to the dollar at the parallel market, while the official interbank rate also dropped by 0.05 to N196.95 to the dollar.

Nigeria’s growing list of banking restrictions caused the rise in interest rates and increased bureaucracy. Rising inflation in addition to recent Naira devaluations have translated into an increase in the prices of many common market goods. While a decision by the Central Bank of Nigeria (CBN) to reject cash deposits in dollars resulted in the rise of Nigeria’s currency against the US dollar in the first week of August, this was rather short-lived.

While the CBN Governor continues to work harder to save the Naira, nothing good seems to be coming from these efforts. Key players in the banking sector, comprising of some CEOs and certain committee members have expressed their discontent with the ways in which the currency is presently handled. Also, there is a growing consensus amongst bankers that despite the currency controls, in an environment characterized by low oil prices, the CBN will eventually have to devalue the Naira.

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