In a shift that tempered earlier optimism, the Nigerian naira depreciated against the dollar for the second consecutive day, closing at N1,484.75 on Thursday, May 30, 2024. This reversal followed a brief period of unexpected strength earlier in the week, when the naira appreciated to N1,173.88 on Tuesday, marking its most robust performance in over two months.
The buoyancy witnessed earlier in the week sparked hopes of a sustained recovery, particularly ahead of the May 29th celebration. However, these aspirations were short-lived as the naira retreated above the N1,400 mark by Thursday, ending the week on a somber note.
The official exchange rate concluded at N1,484.75 per dollar on Thursday, reflecting a 10.45% depreciation within a single day. Intra-day trading saw the naira fluctuate between N1,520/$1 and N1,100/$1, signaling a significant disparity between the high and low points. This disparity has widened in recent days, underscoring the volatility within the currency market.
Meanwhile, the Nigerian Autonomous Foreign Exchange Market (NAFEM) closed at N1,263.88 on May 29, 2024. Despite the volatility, daily turnover stood at $235.41 million, representing a 30% decrease from the previous day’s $336.54 million. However, the market experienced a substantial increase in turnover compared to the same period last week, totaling approximately $1.08 billion.
On the parallel market, where unofficial trading occurs, the exchange rate remained within the range of N1,460 to N1,470 per dollar, aligning closely with the official rate.
Earlier in the week, the naira’s surge to N1,173.88/$1 on the NAFEM window marked a notable 14.09% increase from the previous day’s rate. This surge, the highest one-day increase since January 2024, coincided with a significant uptick in foreign exchange turnover, rising by 81.59% to $328.32 million.
The Central Bank of Nigeria (CBN) had reportedly intensified dollar sales on the official market in anticipation of the maturation of a $1.3 billion non-deliverable forward (NDF) on May 29, 2024. However, with the conclusion of the NDF, the exchange rate has reverted to the normal range of between N1,400-N1,500 per dollar.
Despite efforts to stabilize the exchange rate, Nigeria’s external reserves stood at $32.68 billion as of May 28, 2024, yet to recover to levels above $33 billion since early April. The country continues to pursue foreign investor inflows to bolster foreign currency liquidity, with monetary policies such as the increase in the benchmark interest rate to 26.25% aimed at driving such inflows.
