The Nigerian naira experienced a significant decline of 17.91%, reaching N951.22 against the US dollar on the official Investor and Exporter (I&E) forex window. This downturn occurred on Wednesday, mirroring the challenges faced by the national currency amid a fluctuating economic landscape.
The fall in the naira’s value coincided with a 4.94% reduction in dollar supply, dropping from $142.63 million to $135.58 million. Data from FMDQ Securities Exchange revealed that the naira lost N144.49 against the dollar, closing Tuesday’s trading at N806.73/$ but concluding Wednesday at N951.22/$.
The day’s forex activities saw the naira opening at N828.33/$, reaching a high of N1159.10/$, a low of N701.00/$, and ultimately closing at N951.22/$. The total dollar turnover for Wednesday amounted to $135.58 million.
Despite concerted efforts by the Central Bank of Nigeria (CBN) to stabilize the national currency, the naira’s persistent volatility remains a cause for concern. The CBN’s attempts to unify the country’s foreign exchange rates have strained Nigeria’s foreign exchange reserves, which recently fell by $1.6 billion to $32.97 billion.
The Economist Intelligence Unit’s Africa Outlook report highlighted challenges facing the naira, stating, “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved.”
CBN Governor Olayemi Cardoso acknowledged the impact of fiscal deficits and public debt increases on external reserves and exchange rate instability. Speaking at the Chartered Institute of Bankers of Nigeria 58th Annual Bankers’ Dinner, he stated, “We have already witnessed improvements in FX market liquidity in recent weeks,” emphasizing the need for discipline and commitment to rebuild foreign exchange reserves.
The governor expressed optimism that, with focused efforts, foreign exchange reserves could be revitalized to levels comparable to similar economies. However, the recent challenges in the forex market underscore the complexities and uncertainties surrounding Nigeria’s currency dynamics.