The Nigerian naira experienced a significant depreciation against the United States dollar, reaching N1,234 at the official foreign exchange market on Monday, according to data sourced from the FMDQ securities exchange.
This latest exchange rate signifies a decline of N65 or 5.26 percent from the N1,169.99/$1 rate recorded on Friday.
Earlier projections had hinted at the naira potentially trading below N1,000/$1 for the first time, with the local currency strengthening to approximately N1,072.74 on Wednesday. However, the recent drop coincides with statements made by the Central Bank of Nigeria’s Governor, Yemi Cardoso, indicating that the bank’s intention is not to defend the naira, amidst a sudden drop in external reserves.
Nigeria’s foreign exchange reserves have witnessed a continuous decline over the past month. Recent data from the Central Bank of Nigeria reveals that the external reserves hit a new low of $32.1 billion on April 18, 2024, marking a $2.35 billion decrease within a 31-day period, down from $34.45 billion on March 18, 2024.
At the International Monetary Fund/World Bank Spring Meetings, the CBN governor emphasized the bank’s reluctance to intervene in the exchange rate unless faced with unusual circumstances, clarifying that the recent dip in reserves is not linked to defending the naira.
The naira’s recent decline in the forex market has drawn attention, particularly after its remarkable performance as the best-performing currency globally in late March. This decline follows its first weekly setback in several weeks on the parallel market.
Observers attribute the naira’s earlier misfortune to alleged market manipulation by Binance, a crypto exchange platform. However, recent slips are being linked to new crypto exchange platforms such as BYBIT and BITGET.
Analysts point out a six-month depreciation trend from July 2023 to January 2024, notably in the black market, following the disbursement of funds by the Federation Account Allocation Committee (FAAC) to federal, state, and local government authorities.
In the current forex transactions, the intra-day high saw a depreciation, closing at N1,295 per dollar, with the intra-day low at N1,051/$. The total daily turnover slightly dropped to $110.17 million on Monday.
Parallel market currency traders quoted the dollar between N1,250 and N1,270, compared to N1,154 recorded the previous Friday. Bureau de Change operators attribute this increase to market forces, expressing uncertainty regarding further increases or reductions by week’s end.
As market dynamics continue to influence the naira’s performance, stakeholders are closely monitoring its trajectory amidst ongoing economic developments.
