Naira Trade Against the Dollar at N1309 at the Official Market

On Thursday, the naira experienced a major decline against the US dollar, trading at N1,309/$ at the official market and N1,420 at the parallel market. This depreciation can be attributed to the high demand for the dollar.

The new rate shows a 6.8% decline from how the naira traded against the dollar for N1,330 on Wednesday, following fresh pressure on the dollar's demand in the FX market.

PUNCH reported that currency dealers at the Wuse Zone 4 market claimed that operators made a profit margin of N80 by purchasing the dollar at N1,340 and selling it at N1,420.

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In a telephone conversation with the news network, Malam Yahu Abubakar said “We are selling at N1,420 per dollar today, and we bought at N1,340. The only reason the naira is dropping is an increased demand for the greenback. The CBN is trying to address the situation, but it has not affected the market.”

With the current exchange rate, the naira has lost 26.2% in just two weeks compared to the N1,125 per dollar quoted on April 12, 2023, on the parallel market, also known as the black market.

On Monday, the Nigerian Central Bank authorised the distribution of $15.83 million to 1,583 BDC operators, aiming to improve unofficial market liquidity. 

The CBN announced the allocation of $10,000 to operators nationwide in a letter to BDCs. The allocation, which is only made available to those who qualify at a rate of N1,021 per US dollar, aims to stabilise the foreign exchange market.

In a letter to the Association of Bureau De Change Operators of Nigeria, the CBN stated that, as of Monday, April 22, 2024, all qualified BDCs must begin making Naira deposit payments to the designated CBN Naira Deposit Account Numbers.  The CBN will release foreign exchange at the appropriate CBN branches upon receipt of the required documentation and confirmation of payment.

At the close of Thursday's trading at the official market, the value of the naira against the dollar had declined to N1,309.88 when compared to the previous rate of N1,308.52 on Wednesday, which represents a 0.10% decline.

According to a summary of the forex trade, the intraday high declined by N68 to close at N1,435 per dollar, compared to N1,367. From N1,098 on Wednesday, the intraday low declined to N1,100.

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This Wednesday at the Nigerian Autonomous Foreign Exchange Market, the volume of forex trading between a willing seller and a willing buyer increased significantly by 61% to $318.08 million, surpassing the previous record of $197.54 million. 

Back Story

On Monday, data from the FMDQ securities exchange indicated that the naira's value at the official foreign exchange market declined to N1,234 against the US dollar.

According to the exchange rate, the naira dropped from N1,169.99/$1 on Friday by N65 or 5.26%.

On Wednesday last week, the naira appreciated about N1,072.74, as traders predicted it would fall below N1,000/$1 for the first time.

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