The naira continued its free fall across Foreign exchange (FX) markets, despite a surge in dollar supply at the official market.
FX trading at the Nigerian Autonomous Foreign Exchange Market (NAFEM) witnessed a depreciation in the value of the local currency by 0.79 percent as the dollar was quoted at N1,478.11 on Monday, weaker than N1,466.31 quoted on Friday.
Dollars supplied by willing sellers and willing buyers increased significantly by 91.28 percent to $217.64 million on Monday from $113.78 million recorded on Friday.
The intraday high closed at N1,515 per dollar on Monday, weaker than the N1,490 closed on Friday. The intraday low appreciated to N1,301/$1 as against N1,322/$1 on Friday.
A report by Commercio Partners stated that the naira was able to extend its appreciation from mid-March till mid-April, before the recent decline. The naira however closed flat against the dollar in April appreciation only by about 0.04 percent in the official market.
“The Central Bank of Nigeria’s (CBN) aggressive interest rate increase of 600 basis points in early 2024, combined with government debt issuance, likely helped strengthen the Naira. However,
increased Foreign Direct investment inflow will extend the naira strength for a long time,” analysts at Commercio Partners said.
In April, the country’s gross foreign reserves plummeted to $32.25 billion, marking a $1.32 billion reduction from March’s closing balance of $33.57 billion. This is a significant drop from a peak of USD34.4 billion in mid-March.
The reduction in the gross reserve was attributed partly to repayment of existing debt obligations, and FX sales to the Bureau De Change (BDCs) to support the currency.
The initial increase in Nigeria’s foreign reserves was due to an increase in foreign remittance and also an improvement in portfolio inflows in the country.
