May 27, 2024

Nigerian Naira Slumps to N1,234/$ at Official Market Amid Speculators’ Return to Hoarding

 

 

 

The Nigerian naira faced a substantial devaluation against the United States dollar, plummeting to N1,234 at the official foreign exchange market on Monday, based on data sourced from the FMDQ securities exchange.

 

This marks a notable decline of N65 or 5.26 percent from the preceding rate of N1,169.99/$1 reported on Friday.

 

Initial optimism regarding the naira’s strength, with traders envisioning a potential dip below N1,000/$1 for the first time, was dashed as the currency faltered.

 

The recent downturn in the naira coincides with statements made by the Governor of the Central Bank of Nigeria, Yemi Cardoso, who clarified that the bank’s primary aim was not to defend the naira amidst the dwindling external reserves.

 

Nigeria’s foreign exchange reserves have undergone a month-long decline streak, hitting a new low of $32.1 billion on April 18, 2024, marking a $2.35 billion reduction in 31 days from $34.45 billion on March 18, 2024.

 

However, Governor Cardoso clarified that the recent dip in reserves was unrelated to defending the naira and emphasized the bank’s stance of refraining from intervening in the exchange rate unless unusual circumstances arose.

 

Observers attribute the naira’s prior downturn to alleged market manipulation by Binance, but the recent setback is attributed by some stakeholders to new crypto exchange platforms BYBIT and BITGET.

 

Analysts posit that the naira’s depreciation over the past six months, notably evident in the black market, was influenced by the disbursement of funds by the FAAC to government authorities.

 

In the forex market, the intra-day high depreciated, concluding at N1,295 per dollar, while the intra-day low diminished to N1,051/$. Daily turnover marginally declined to $110.17 million on Monday.

 

At the parallel market, currency traders transacted the dollar within the range of N1,250 and N1,270, compared to N1,154 recorded the preceding Friday.

 

Bureau de Change operators attribute the upsurge in the dollar rate to market forces and express uncertainty regarding further fluctuations before the week’s end.

 

The recent upsurge of the naira, culminating in it being touted as the best-performing currency globally, came to a halt last Sunday with its initial weekly decline in several weeks on the parallel market, signaling a volatile trend in the currency market.

 

BDC operator, Abubakar Taura, remarked, “We sold the dollar today within the range of N1,250 and N1,270, and it is somewhat surprising because we don’t even know the real reason, but that is the market.”

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