Naira Falls to N1,234/$ at Official Market as Speculators start Hoarding Again

The official foreign exchange market recorded the depreciation of the naira against the US dollar to N1,234 on Monday, according to data from the FMDQ securities exchange.

This represents a 5.26% decrease from the N1,169.99/$1 rate on Friday, with the naira falling by N65.

Earlier in the week, the local currency had strengthened to approximately N1,072.74, leading to projections of it trading below N1,000/$1 for the first time.

However, this recent drop seems to align with the comments made by the apex bank Governor, Yemi Cardoso, who indicated that the bank's intention was not to defend the naira when questioned about the sudden decline in external reserves.

Nigeria's foreign exchange reserves have experienced a one-month decline, reaching a new low of $32.1bn on April 18, 2024, according to the latest figures from the Central Bank of Nigeria.

This represents a decrease of $2.35bn from the $34.45bn recorded on March 18, 2024.

Despite this, the CBN governor stated at the International Monetary Fund/World Bank Spring Meetings that the bank would refrain from intervening in the exchange unless unusual circumstances arose, emphasizing that the recent decrease in reserves was not related to defending the naira.

The national currency had faced significant challenges in the forex market prior to the clampdown on Binance, with exchange rates reaching as high as N1,950 in mid-February.

Observers blamed its earlier misfortune on alleged manipulation of the market by Binance. However, some stakeholders have accused the new crypto exchange platforms BYBIT and BITGET for the latest slip.

Analysts suggested that the naira experienced a depreciation over the span of six months from July 2023 to January 2024, particularly evident in the black market following the disbursement of funds by the FAAC to federal, state, and local government authorities.

The summary of the forex transaction showed that the intra-day high depreciated, closing at N1,295 per dollar. The intra-day low also reduced to N1,051/$. While the total daily turnover dropped slightly to $110.17m on Monday.

At the parallel market, currency traders sold the dollar between the rate of N1,250 and N1,270 from N1,154 recorded last Friday.