The value of the naira against the United States dollar depreciated to N1,234 at the official foreign exchange market on Monday, based on data from the FMDQ Securities Exchange.
This exchange rate indicates a decline of N65 or 5.26 percent from the N1,169.99/$1 recorded on Friday.
Last Wednesday, the local currency had strengthened to approximately N1,072.74, with traders anticipating the possibility of the naira trading below N1,000/$1 for the first time.
However, the recent drop seems to align with remarks made by the Central Bank Governor, Yemi Cardoso, who stated that the bank’s intention was not to defend the naira, in response to inquiries about the sudden decline in external reserves.
Nigeria’s foreign exchange reserves have seen a continuous decline for the past month. Recent figures from the Central Bank of Nigeria indicate that the external reserves hit a new low of $32.1 billion on April 18, 2024. Over 31 days, the reserves decreased by $2.35 billion, from $34.45 billion on March 18, 2024.
During the International Monetary Fund/World Bank Spring Meetings, the CBN governor emphasized that the bank would refrain from intervening in the exchange rate unless there were unusual circumstances. He clarified that the recent slight decline in reserves was unrelated to defending the naira.
The national currency had faced significant challenges in the forex market in the weeks leading up to the crackdown on Binance, reaching as high as N1,950 in mid-February.
Observers initially attributed its decline to alleged market manipulation by Binance. However, some stakeholders now point fingers at the new crypto exchange platforms BYBIT and BITGET for the recent slip.
Analysts note that the naira experienced depreciation over six months, from July 2023 to January 2024, particularly evident in the black market following the disbursement of funds by the Federation Accounts Allocation Committee (FAAC) to federal, state, and local government authorities.
In Monday’s forex transactions, the intra-day high depreciated, closing at N1,295 per dollar, while the intra-day low reduced to N1,051/$. The total daily turnover slightly dropped to $110.17 million.
At the parallel market, currency traders sold the dollar within the range of N1,250 to N1,270, compared to N1,154 recorded last Friday.
Bureau de Change operators attribute the new increase in the dollar rate to market forces, expressing uncertainty about further increases or reductions by the end of the week.
The naira’s recent surge, which made it the best-performing currency globally since late March, halted on Sunday with its first weekly decline in several weeks on the parallel market.
A BDC operator, Abubakar Taura, remarked, “We sold the dollar today within the range of N1,250 and N1,270, and it’s a bit surprising because we don’t even know the real reason, but that is the market — one day there will be profit, and another day, we make losses.”
