On the official Foreign Exchange window for Investors and Exporters, the naira ended trading on Wednesday at N1035.12/$.
From the N988.46/$ it closed trading on Tuesday, this represents a 4.72% decrease, per statistics from the FMDQ Securities Exchange.
The national currency has declined in the first two trading days of 2024, and Wednesday’s closing above N1,000/$ is the third time it has done so since the Central Bank of Nigeria lifted its rate cap.
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The I&E window showed that the naira hit an all-time low of N1,099.05/$ on December 8. Following a modest rebound, it dropped to N1043.09/$ on Thursday, December 28, 2023.
The naira started trading at N932.67/$ on Wednesday. Before closing at N1035.12/$, it reached an intraday high of N1,224/$ and a low of N700/$. The day’s total FX turnover was $85.68 million.
Despite the Federal Government’s recent receipt of a $2.25 billion foreign exchange support facility from the African Import-Export Bank, the naira has had a poor start to 2024.
The first tranche of the bank’s $3.3 billion facility, according to Wale Edun, Minister of Finance and Coordinating Minister for the Economy, is intended to address the economy’s FX shortages.
This loan is a component of a facility that was announced as secured in August 2023 by Nigerian National Petroleum Company Limited.
One of the currencies with the lowest performance is still the naira. According to Bloomberg, 2023 was one of the worst years ever for the currency, and 2024 might not be any better.
The World Bank reported in its December Nigeria Development Update that the official market value of the naira has dropped by 41% compared to the US dollar, while the parallel market has seen a 30% decline. It stated that for the naira to become stable in the official market, more volume is required.
It said, “More tightening of monetary policy is anticipated to support the value of the naira.” But there’s also a need to boost FX.
It said, “More tightening of monetary policy is anticipated to support the value of the naira.” But the market’s supply of FX must also be increased. Encouraging foreign exchange flows through the NAFEM, particularly from all exports, can contribute to more volume in the official window and stability.
“More clarity on the CBN’s net reserve position and its ongoing efforts to reduce the foreign exchange backlog would also boost market confidence.”