Naira records highest ever fall amid declining external reserves

Naira fell to an all-year low on the first trading day of April, following increased demand for dollars amid declining external reserves.

At the close of trading on Monday naira depreciated by 0.46 percent as the dollar was quoted at N463.50 as against the last close of N461.38 on Friday at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange (FX) market.

Most currency dealers who participated at the FX market auction on Monday maintained bids between N460.00 (low) and N466.00 (high) per dollar.

The foreign exchange market turnover, which reflects the level of activity in the I&E window closed at $175.40 million on Monday, data from the FMDQ indicated.

Nigeria’s external reserves decreased by 0.56 percent to $35.53 billion, as the Central Bank of Nigeria (CBN) continues to intervene across the various FX windows.

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“This does not seem to be the time for a change in CBN policy, in our view. The CBN is likely to continue with its policy of gradual loosening of the I&E Window rate while managing FX reserves at close to their historic highs. We expect only small FX rate adjustments over the coming weeks and months”, analysts at Coronation Research said.

Last week, the exchange rate at the Investors and Exporters Window lost 0.01 percent to close at N461.38/$1.

Naira weakened marginally by ₦1 closing at ₦746 per dollar on Monday, (the same rate quoted on Tuesday morning) as against ₦745/$ last week on the parallel market, also known as black market.

“You can’t say this is depreciation because there is no demand for dollars in the market,”a black market operator told BusinessDay on Tuesday.

Last Week,the price of Brent gained for the second consecutive week, increasing by 6.37 percent to settle at US$79.77/bbl, a report by Coronation Research noted.

According to the report Brent was down 7.15 percent year-to-date and is trading at an average of $82.16/bbl,17.08 percent lower than the average of $99.09/bbl in 2022.