Naira Depreciates, Falls To N1,234 Per Dollar As Investors Start Hoarding Again

ON Monday, April 22, the official foreign exchange market saw the naira drop in value against the US dollar to N1,234 in value.

This was based on information viewed on the stock market FMDQ.

Based on the exchange rate, on Friday, April 19, the naira traded at N1,169.99 against the dollar, a decrease of N65, or 5.26 percent.

On Wednesday, April 17, the naira gained strength and reached approximately N1,072.74, as traders anticipated that the naira would fall below N1,000 to the dollar for the first time.

The most recent decline, though, appears to be in line with comments made by Yemi Cardoso, Governor of the Central Bank of Nigeria (CBN), who mentioned the sharp decline in foreign reserves and said the bank's intention was not to support the Naira.

Nigeria's foreign exchange reserves have been declining for the past month. According to the CBN's most recent data, on April 18, 2024, the external reserves hit a new low of $32.1 billion. From $34.45 billion on March 18, 2024, to $2.35 billion in 31 days, was the decrease in reserves.

However, the governor of the CBN stressed that the recent small move in reserves was unrelated to defending the naira and said at the World Bank/IMF Spring Meetings that the bank would not intervene in the exchange unless extraordinary circumstances emerged.

He declared, “I want to make this as clear as possible, it is not in our intention to defend the naira, and as much I have read in the recent few days, some opinions with respect to what is happening with our reserves and if the central bank is defending the naira.”

On Friday, April 19, operators at the Bureau de Change (BDC) parallel market traded dollars between N1,250 and N1,270, down from N1,154.

BDC operators stated that market forces were to blame for the recent hike in the dollar rate, but they did not know if further increases or decreases would occur before the end of the week.

The world's best-performing currency, the naira, has been on a tear since late March. However, on Sunday, it saw its first weekly loss in a few weeks on the parallel market.

According to a BDC operator, “We sold the dollar today between the rate of N1,50 and N1,270 and it is 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.”