Emmanuel OchayiThe Nigerian Naira witnessed a decline against the United States dollar, hitting N1,234 at the official foreign exchange market on Monday.
This marks a notable fall of N65 or 5.26 percent from its previous rate of N1,169.99/$1. The downward spiral follows recent remarks from the Central Bank of Nigeria (CBN) Governor, Yemi Cardoso, clarifying the bank’s stance on defending the currency.
In a statement addressing concerns over the plummeting external reserves, Governor Cardoso emphasized the CBN’s intention not to intervene in currency defense unless faced with extraordinary circumstances. He explicitly stated, “It is not in our intention to defend the naira.”
The nation’s foreign exchange reserves have experienced a continuous decline over the past month, reaching a new low of $32.1 billion on April 18, 2024. This represents a decrease of $2.35 billion within a 31-day period, highlighting ongoing challenges in stabilizing the currency.
The recent depreciation contrasts with earlier optimism among traders, who anticipated the naira’s value potentially dropping below the N1,000/$1 threshold. However, market dynamics have shifted, prompting concerns over the currency’s resilience.
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Observers attribute the naira’s previous struggles to alleged market manipulation by platforms like Binance. The recent slip in value has been associated with the emergence of new crypto exchanges, including BYBIT and BITGET, raising questions about their impact on currency stability.
Analysts point to a six-month depreciation trend from July 2023 to January 2024, exacerbated by factors such as the disbursement of funds by the Federation Account Allocation Committee (FAAC) to government entities at various levels.
Forex transactions indicate fluctuations in the naira’s performance, with the intra-day high reaching N1,295 per dollar and the intra-day low dropping to N1,051/$. Despite a slight reduction in total daily turnover to $110.17 million on Monday, concerns persist over the currency’s volatility.
Parallel market traders reported selling the dollar between N1,250 and N1,270, reflecting a notable increase from previous rates. Bureau de Change operators attribute the rise to market forces, expressing uncertainty regarding future trends.
The naira’s recent surge, which positioned it as the best-performing currency globally, came to a halt with its first weekly decline in several weeks on the parallel market. BDC operators, like Abubakar Taura, acknowledge the unpredictable nature of the market, underscoring the challenges faced by stakeholders.
As the naira grapples with ongoing fluctuations, stakeholders await further insights from the CBN on its monetary policy approach and strategies to safeguard the currency’s stability amidst evolving market dynamics.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
