Naira Still Not Confident Against the Dollar as It Continues Despite $500 Million From CBN

On Monday, the naira fell to N1348.63/$ at the Nigerian Autonomous Foreign Exchange Market. The decline shows a 51.21% drop from how the N891.90/$ traded last Friday at the official market. This data was obtained from the FMDQ Securities Exchange.

The Monday official rate is the worst exchange rate the country has recorded since the Central Bank of Nigeria (CBN) floated the national currency in June 2023.

The continuous depreciation of the naira against the dollar defies efforts by the Central Bank of Nigeria and the Federal Government to boost liquidity in the foreign exchange market.

On Monday, the CBN said it had distributed $500 million to clear part of its forex obligations. This follows a recent $2 billion payment for the same purpose. The bank is reported to owe a debt of $7 billion in FX backlogs.

The apex bank’s spokesperson, Mrs. Hakama Sidi Ali, revealed the $500 million payment in Abuja on Monday.

She said,

• The management of the CBN is committed to settling all legitimate foreign exchange backlogs within a short time frame.

Ali assured Nigerians that the CBN is implementing strategies to improve cash flow in the Nigerian FX markets in the short, medium, and long term.

She added, 

• As the governor said, the CBN focuses on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years.

While announcing some of the moves of the CBN to save the naira, the CBN governor, Olayemi Cardoso, revealed that the naira is currently undervalued.

The continued fall of the naira is expected to negatively impact the prices of goods and services in the country. 

According to Bureau de Change Operators, the naira further fell to N1,450/$ as of the end of trading on Monday. On Friday, the naira closed at N1,420/$ on the parallel window.

The naira also took a beating in the cryptocurrency peer-to-peer market, trading for N1,429/$ on Binance’s P2P platform as of the time of filing this report. According to Chainalysis, a blockchain firm, Nigeria has one of the largest peer-to-peer exchange volumes in the world.