Naira recorded a further depreciation against the US Dollar on Tuesday, January 16, 2024, reaching a new low of N1300/$ at the parallel market. This marks a substantial depreciation of 4.87%, emphasizing the challenging economic conditions in the country.
At the close of trading hours on Tuesday, data from parallel markets revealed a notable 6.79% depreciation, with the exchange rate standing at N1300 to a dollar. This movement reflects the ongoing struggles faced by the Naira in the foreign exchange market.
However, a contrasting picture emerged at the official market, where the Naira showed signs of appreciation. The exchange rate quoted at N855/$1, representing a 0.40% increase compared to the previous day’s closing rate of N866/$.
This fluctuation in the Naira’s value comes amid various economic challenges, including rising inflation rates, which reached 28.92% in December. In an effort to address the acute liquidity shortage in the foreign exchange market, the African Export-Import Bank (Afreximbank) recently released $2.25 billion as part of a $3.3 billion foreign exchange support facility to the Nigerian Federal Government. This strategic financial arrangement, signed on December 29, 2023, involves multiple stakeholders, with Afrexim Bank, United Bank for Africa (UBA), Guvnor, Sahara Energy, and the Nigerian National Petroleum Corporation (NNPC) playing key roles.
As the Mandated Lead Arranger, Afrexim Bank orchestrated the facility in collaboration with UBA as the Local Arranger. NNPC, acting as the principal financier, is facilitating the financing of the transaction. Other major oil trading firms, including Sahara Energy, Vitol, Oando, and Gunvor, are involved as sub-lenders. The first tranche of $2.25 billion from this facility aims to alleviate forex liquidity pressures, with UBA also serving as the Onshore Depository Bank.
Despite these efforts, the Naira’s decline in the parallel market highlights the persisting challenges in maintaining stability in the country’s foreign exchange market. Investors and analysts will closely monitor further developments in Nigeria’s economic landscape amid ongoing efforts to address currency depreciation and liquidity shortages.