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The value of the Nigerian Naira against the United States Dollar depreciated to N1,234 at the official foreign exchange market on Monday, according to data obtained from the FMDQ Securities Exchange. This represents a decline of N65 or 5.26% from the rate of N1,169.99/$1 recorded on Friday.
Traders had previously projected that the Naira could trade below N1,000/$1 for the first time, as the local currency had strengthened to around N1,072.74 on Wednesday. However, the recent drop in value appears to coincide with remarks made by the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso. When asked about the sudden drop in external reserves, Cardoso stated that the intent of the bank was not to defend the Naira.
The country’s foreign exchange reserves have been on a decline for the past month, reaching a new low of $32.1 billion on April 18, 2024. This represents a drop of $2.35 billion in just 31 days. Despite this, the CBN governor emphasized that the recent shift in reserves was unrelated to defending the Naira and that the bank would refrain from intervening in the exchange market unless unusual circumstances arose.
The Naira had previously experienced a slump in the forex market, reaching as low as N1,950 in mid-February. Observers had attributed this to alleged market manipulation by Binance. However, the latest slip in value has been attributed to new crypto exchange platforms such as Bybit and Bitget.
At the parallel market, currency traders are now selling the dollar between the rates of N1,250 and N1,270, compared to N1,154 recorded last Friday. Bureau de change operators have cited market forces as the reason for the increase in the dollar rate and are uncertain about further fluctuations before the end of the week.
The Naira’s previous surge, which had made it the best-performing currency in the world, came to a halt recently with its first weekly decline on the parallel market.
This article was updated 5 months ago
