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Naira strengthens against the US dollar to N856.57/$1 in the official market

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Naira further gained against the dollar on Monday, 8th December 2024 at the official market, marking the third gain in the New Year.   

The domestic currency appreciated 1.45% to close at N856.57 to a dollar at the close of business, data from the NAFEM where forex is officially traded, showed.   

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  • This represents an N12.56 gain or a 1.45% increase in the local currency compared to the N869.13 closed the previous day.        

Similarly, the naira appreciated at the parallel forex market where forex is sold unofficially, the exchange rate quoted at N1245/$1, representing a 0.80% increase over what it closed the previous day, while peer-to-peer traders quoted around N1235.17/$1.    

READ ALSO:   Naira gains at official window as forex liquidity surges

What you should know    

Afreximbank recently released $2.25 billion out of the $3.3 billion foreign exchange (FX) support facility to Nigeria’s FG to relieve the acute liquidity shortage in the country’s FX market.   

This pivotal agreement was officially signed on December 29, 2023, marking a milestone in the financial cooperation between the involved entities, who also recently signed a $150 million deal.   

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  • In this strategic financial arrangement, Afrexim Bank, fulfilling its role as the Mandated Lead Arranger, works in close coordination with the United Bank for Africa, which assumes the responsibility as the Local Arranger.   
  • The facility was successfully finalized with NNPC Limited acting as the principal financier.   
READ ALSO:   Black Market Dollar To Naira Exchange Rate Today 26th December 2021

The arrangement also includes Guvnor and Sahara Energy as key participants in the transaction, highlighting the collaborative effort of multiple stakeholders.   

  • The total transaction value is US$3.3 billion, a facility obtained through Afrexim bank to help boost dollar supply towards alleviating Nigeria’s current FX supply challenges in the NAFEM official trading window.   
  • The first tranche of the transaction amounts to US$2.25 billion. This sum will be deposited into a designated account at the Central Bank, and it is expected to ease forex liquidity pressures.   
  • UBA is also functioning as the Onshore Depository Bank for this arrangement.   
  • The Nigerian National Petroleum Corporation (NNPC) is facilitating the financing of this transaction, acting as a lender. Other major oil trading firms involved as sub-lenders include Sahara Energy, Vitol, Oando, and Gunvor.   
  • In addition to their roles in the transaction, UBA, Sahara Energy, Vitol, Oando, and Gunvor contributed $100 million to the facility.   
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