CBN Adjusts FX for Banks, Currency Traders, Others as Naira Sets New Records in Official Window
- The Nigerian currency, the naira, has hit an all-time low of N1,667.42 per dollar in the official market
- The naira depreciated by 0.54% to set a new exchange rate in the official market after CBN increased interest rates
- Traders in the parallel market sold the dollar at N1,700, hitting a seven-month low in the black market
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency, the naira, dropped to an all-time low of N1,667.42 per dollar in the official window after the Central Bank of Nigeria (CBN) hiked interest rates to 27.25% to contain inflation and stabilise the exchange rates markets.
After trading on Wednesday, September 25, 2024, the naira dipped by 0.54% to keep the exchange rate at N1,667.42 per dollar relative to the N1,658.48 it traded on Tuesday, September 24, 2024.
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The naira hits a seven-month low in the black market
The Nigerian currency crashed to a seven-month low of over N1,700 per dollar in the parallel market, the lowest since February 22, 2024, when traders quoted the dollar at N1,850 in the black market.
Wednesday, September 25, 2024, traders quoted the dollar at a high of N1,699 per dollar and a low of N1,600.
Data from the FMDQ Exchange shows that FX turnover declined as traders threw $100.47 million into the forex market on Wednesday, September 25, 2024.
Abbas Yishau, a currency trader on the Ogba axis in Lagos, told Legit.ng that dollars are currently scarce, driving demand.
“Most people are now looking for how to get dollars to buy goods or send their children back to school abroad, which is causing scarcity now,” he said.
Meanwhile, shortly after the CBN announced the interest rate increase for the fifth time this year, the naira’s value dropped by N93.85 in the official window on Tuesday, September 23, 2024.
Legit.ng reported that by the end of trading on Tuesday, September 24, 2024, the naira depreciated, with traders quoting the dollar at N1,658.48 per dollar.
Experts have predicted that the naira will depreciate to N2,000 per dollar on or before December this year.
FX turnover hits $9.9 billion in August
Legit.ng previously reported that the volume of FX turnover through the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose to N15 trillion in August 2024.
The development came as the Central Bank of Nigeria (CBN) disclosed that foreign inflow into Nigeria in the same period increased to $585 million in August.
Naira depreciates despite massive inflows
According to the CBN, the impressive FX turnover via NAFEM represents a significant monthly increase of 33.88% in addition to N2.51 trillion recorded in July’s turnover of N13.23 trillion.
Experts believe this surge shows increased trading activity and investor engagement in the FX market.
Commercial banks, CBN, and international oil companies are major sellers of FX at NAFEM.
FMDQ’s monthly report for August shows that the increase in turnover was driven by increased transactions in Treasury Bills, OMO Bills, and FGN Bonds, while transactions in other bonds recorded a monthly increase of 18.43%.
The naira experienced continued depreciation despite increased FX turnover, contributing to increased exchange rate volatility.
CBN crashes dollars for importers to clear goods
Legit.ng earlier reported that the CBN had slashed the FX rate for cargo clearance in Nigeria’s ports.
The development came notwithstanding the crash of the Nigerian currency, the naira, in the official market on Friday, August 30, 2024.
Data from the FMDQ Exchange shows that the naira crashed to N1,598.55 per dollar compared to the N1,593.93 traded on Thursday, August 29, 2024.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
