The naira experienced a significant dip, closing at N885.88 per dollar on December 22, 2023, marking a N23.97 depreciation from the previous day’s close. This comes as the gap between the official and parallel market rates narrowed to N339.12 per dollar.
According to FMDQ statistics, the indicative exchange rate for the Nigerian Foreign Exchange Market (NAFEM) rose from N861.91 per dollar on Thursday to N885.88 per dollar on Friday, reflecting a currency devaluation. The intraday low and high for the window were N700 and N1,248 per dollar, respectively, resulting in a N548 per dollar margin.
In parallel markets, the naira’s value dropped from N1,220 to N1,225 per dollar. The narrowing gap between official and parallel market rates, closing at N339.12 per dollar on Friday compared to N358.09 per dollar on Thursday, indicates market margin closure.
The volume of dollars traded on the window fell by 49% to $92.16 million from $181.3 million traded on Thursday, suggesting decreased market activity.
CBN Lifts Ban on Crypto Transactions
In a surprising move, the Central Bank of Nigeria (CBN) recently lifted restrictions on cryptocurrency transactions in commercial banks, reversing the 2021 ban. The ban had been imposed due to concerns related to money laundering and terrorism financing.
The CBN now emphasizes the need for crypto regulation instead of a total ban, aligning with global trends. Analysts anticipate that this decision will impact the naira’s performance in the upcoming week.
Despite the recent challenges in the cryptocurrency market, Nigerians have shown consistent enthusiasm and curiosity about cryptocurrencies. Nigeria has emerged as the country with the most notable interest in Bitcoin, Ethereum, and other cryptocurrencies, even during periods of volatility referred to as the “crypto winter.”
The lifting of the crypto ban coincides with the naira’s fluctuation, adding an element of uncertainty to the foreign exchange landscape. As the week unfolds, market participants will closely monitor the naira’s response to these developments and the potential implications for both traditional and digital currencies.