The Nigerian naira appreciated against the United States American dollar, closing at N791.75/$1 at the official market.

According to data from the FMDQ Securities Exchange, the naira rose by 5.87 per cent or N49.39 compared to the previous day’s rate of N841.14/$ at the Nigerian Autonomous Foreign Exchange Market.

The naira’s gain was, however, expected due to the recent move of the Central Bank of Nigeria to clear some of its FX backlog.

Investors’ highest bid for the dollar was N1120/$1, while the intraday low was N701/$1, representing a wide spread of N419/$1.  Forex turnover at the close of the trading was $157.78m.

Meanwhile, the CBN last week said it had begun clearance of the backlog of foreign exchange forward contracts. The move, experts say is expected to bring relief to the naira, the business community, and the economy at large.

The country has faced persistent dollar shortages since foreign investors exited local assets. Since then, investors have yet to return and the apex bank has struggled to meet the demand for dollars in the country.

The central bank’s payments follow the October 23 announcement by the finance minister, Wale Edun, that Nigeria was expecting $10bn of inflows to improve FX market liquidity.

It will come as a relief to local lenders, who have been struggling to meet demands from customers due to chronic dollar shortages in Africa’s largest economy.

Speaking on CBN’s clearance of forex backlog, deputy president of Lagos Chamber of Commerce and Industry, Gabriel Idahosa, said clearance of backlogs of FX forwards will bring back confidence in the traditional market.

“The new move by CBN to clear backlogs with international lenders gives the signal that the apex bank is back in trading and business. Apart from bringing back letters of credit, it generally brings back confidence in the traditional market. It restores the confidence of portfolio investors and international airlines. It will also bring foreign direct investments,” Idahosa added.