April 19, 2024

FILE PHOTO: A man counts U.S. dollar banknotes next to Lebanese pounds at a currency exchange shop in Beirut, Lebanon April 24, 2020. REUTERS/Mohamed Azakir/File Photo

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The Naira regained ground to appreciate massively against the dollar on Thursday 11th January 2024 at the official market after maintaining a record low on Wednesday 10th, 2024.   

The domestic currency appreciated by 19.17% to close at N874.79 to a dollar at the close of business, data from the NAFEM where forex is officially traded, showed.      

This represents an N207.53 gain or a 19.17% increase in the local currency compared to the N1,082.32 it closed on Wednesday.      

The intraday high recorded was N1264.96/$1, while the intraday low was N475/$1, representing a wide spread of N789.96/$1.      

According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $110.41 million, representing a 54.49% decrease compared to the previous day.      

However, the naira dropped at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 0.40%, quoted at N1245/$1, while peer-to-peer traders quoted around N1261.57/$1.      

 Afreximbank recently released $2.25 billion from 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.    

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.    

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, which 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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