Naira rises to 1,230.61 despite declining external reserves

The Naira, Nigeria’s currency on Monday strengthened to 1,230.61 per dollar on the official foreign exchange (FX) despite the declining external reserves.

After trading on Monday, the Naira gained 1.66 percent as the dollar was quoted at N1230.61, stronger than N1,251.05 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data released by the FMDQ Securities Exchange.

The intraday high closed at N1,261 per dollar on Monday, stronger than N1,281 closed on Friday. The intraday low appreciated to N1,200 from N1,220 on Friday.

Dollar supply by willing buyers and willing sellers dropped by 49.43 percent to $125.55 million on Monday from $248.27 million recorded on Friday.

The external reserves, which gives the Central Bank of Nigeria (CBN) the firepower to defend the Naira have been declining, following the apex bank’s intervention to stabilise the currency.

Data from the CBN showed that Nigeria’s foreign currency reserves declined by 2.95 percent in the last 10 days to $33.434 billion as of April 4, 2024 compared to $34.449 billion in March 18, 2024.

The naira has maintained its appreciation on the official and unofficial market, strengthening to 1,200 on the black market after the CBN adjusted downward, the rate it sells to the Bureau De Change Operators.

The current rate showed a 3.33 percent appreciation over the level of N1,240 per dollar exchanged on Friday at the parallel market, also called the black market.

“Plenty of dollars are in the market now and demand is low. Also, the CBN has brought down the rate for the BDCs,” one trader told BusinessDay on Monday.

With the current rate, the naira has gained 52.08 percent (N625) of its value against the dollar on the black market according to the rates collated from various street traders and trading platforms.

The Central Bank on Monday reviewed the exchange rate for the Bureau De Charge (BDC) Operators to N1,101 per dollar from N1,251/$1 as it plans to sell $15.88 million to 1,588 eligible BDCs.