The Nigerian naira experienced a further decline against the US dollar on Wednesday, January 17th, 2024, both at the official and parallel markets, adding to the challenges faced by the nation’s currency.
According to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), where official forex transactions take place, the naira depreciated by 6%, closing at N931.23 to a dollar at the end of the business day. This reflects a significant N52.72 loss, representing a 6% decrease compared to the previous day’s closing rate of N878.57.
In a parallel development, the naira also weakened at the unofficial forex market, with the exchange rate quoted at N1320/$1. This represents a 3.03% decrease from the previous day’s rate. Peer-to-peer traders were quoting around N1331.80/$1, indicating a challenging situation in both official and informal forex trading.
These developments come amid reports from Nairametrics that the Central Bank of Nigeria (CBN) is set to impose sanctions following a forensic review that uncovered severe infractions, widespread abuse, and substantial non-compliance with market regulations regarding foreign exchange transactions.
Mrs. Hakama Sidi Ali, the Acting Director of the Corporate Communications Department at the CBN, emphasized the central bank’s commitment to cleansing the financial services sector and building trust among market participants. She revealed that an independent forensic review conducted by a reputable firm served as the basis for these decisions.
Mrs. Sidi Ali stated, “The review revealed grave infractions, gross abuse, and significant non-compliance with market regulations, and appropriate sanctions would be enforced in collaboration with relevant agencies.”
Despite the challenges, the CBN has undertaken significant interventions, injecting approximately $2 billion into various sectors, including manufacturing, aviation, and petroleum. The successful clearance of liabilities for 14 banks marked a milestone in resolving the forex backlog, and settlements with foreign airlines have been initiated.
While the forex market faces uncertainties, the CBN remains committed to settling legitimate foreign exchange backlogs, as it has consistently done in the last three months.
The continuous depreciation of the naira against the dollar underscores the need for strategic measures to stabilize the currency and restore confidence in the foreign exchange market.