The naira depreciated in its value against the United States dollar to N1,234 at the official foreign exchange market on Monday, according to data obtained from the FMDQ securities exchange.
The exchange rate means the naira fell by N65 or 5.26 per cent from N1,169.99/$1 recorded on Friday.
The local currency had strengthened to around N1,072.74 on Wednesday as traders projected the naira could trade below N1,000/$1 for the first time.
However, the latest drop appears to coincide with the remarks of the apex bank Governor, Yemi Cardoso, who stated that the intent of the bank was not to defend the Naira, when asked about the sudden drop in external reserves.
Nigeria’s foreign exchange reserves have maintained a one-month dip streak. The latest figures from the Central Bank of Nigeria show the external reserves reached a new low of $32.1bn on April 18, 2024. The reserves dropped by $2.35bn in 31 days, from $34.45bn on March 18, 2024
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But the CBN governor at the International Monetary Fund/World Bank Spring Meetings stated that the bank would refrain from intervening in the exchange unless unusual circumstances arose, stressing that the recent slight shift in reserves was unrelated to defending the naira.
He said, “I want to make this as clear as possible, it is not in our intention to defend the naira. and as much I have read in the recent few days, some opinions with respect to what is happening with our reserves and if the central bank is defending the naira.”
The national currency had slumped badly in the forex market in the weeks preceding the clampdown on Binance, exchanging for as much as N1,950 in mid-February.
Observers blamed its earlier misfortune on alleged manipulation of the market by Binance. However, some stakeholders have accused the new crypto exchange platforms BYBIT and BITGET for the latest slip.
Analysts suggested that the naira experienced a depreciation over the span of six months from July 2023 to January 2024, particularly evident in the black market following the disbursement of funds by the FAAC to federal, state, and local government authorities.
The summary of the forex transaction showed that the intra-day high depreciated, closing at N1,295 per dollar. The intra-day low also reduced to N1,051/$. 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.
Bureau de Change operators said the reason for the new increase in dollar rate was due to market forces, adding they were unsure if there would be more increase or reduction before the end of the week.
The naira’s surge since late March, which had made it the best-performing currency in the world, came to a stop on Sunday when it had its first weekly decline in several weeks on the parallel market.
A BDC operator, Abubakar Taura said, “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.”
