Data from the FMDQ securities exchange revealed that on Monday, the naira experienced a depreciation against the United States dollar, with the exchange rate reaching N1,234/$1 at the official foreign exchange market. This marks a decline of N65 or 5.26% from the rate of N1,169.99/$1 recorded on Friday,Punch reports.
Earlier in the week, the local currency had shown signs of strengthening, reaching approximately N1,072.74 on Wednesday, with traders anticipating it could fall below N1,000/$1 for the first time. However, the recent drop coincides with remarks made by the Governor of the Central Bank of Nigeria, Yemi Cardoso, who indicated that the bank’s objective was not to defend the naira amidst concerns about the decline in external reserves.
Nigeria’s foreign exchange reserves have experienced a consecutive one-month decline, with the latest figures showing a decrease to $32.1 billion on April 18, 2024, from $34.45 billion on March 18, 2024.
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Governor Cardoso clarified during the International Monetary Fund/World Bank Spring Meetings that the bank would refrain from intervening in the exchange rate unless unusual circumstances arose. He emphasized that the recent decrease in reserves was unrelated to efforts to defend the naira.
The naira had previously faced challenges in the forex market, particularly in mid-February when it exchanged for as much as N1,950. Allegations of market manipulation by platforms like Binance were cited as contributing factors. However, recent concerns have been directed towards new crypto exchange platforms BYBIT and BITGET.
Analysts noted a gradual depreciation of the naira over the past six months, particularly evident in the black market following disbursements by the FAAC to government authorities.
Forex transactions showed a fluctuation, with the intra-day high closing at N1,295 per dollar and the intra-day low at N1,051/$. Daily turnover slightly decreased to $110.17 million on Monday.
In the parallel market, currency traders sold the dollar between N1,250 and N1,270, compared to N1,154 recorded on Friday. Bureau de Change operators attributed the increase to market forces and expressed uncertainty about future fluctuations.
The naira’s recent surge, which had positioned it as the best-performing currency globally since late March, halted with its first weekly decline on the parallel market. BDC operators acknowledged the unpredictability of the market, with fluctuations leading to both profits and losses.
