Nigeria’s Official Exchange Rate Hits Month-to-Date At N1,300/$1

Nigeria’s official exchange rate took a sharp dip on Tuesday, April 23, 2024, plummeting to a month-to-date low of N1,300/$1, according to data from the Financial Markets Dealers Quotations (FMDQ), where the official exchange rate is traded.

This marks a significant 5.05% depreciation from the N1,234.49/$1 recorded at the beginning of the week, continuing the downward trend that commenced last Friday. In just five days, the exchange rate has weakened by a staggering 17.49%, raising concerns about the Central Bank’s capacity to sustain the recent gains.

According to the FMDQ, the day concluded with the exchange rate settling at N1,300.15/$1, amidst a total daily turnover of $133.65 million. Daily turnover has witnessed a noticeable increase from the levels observed on Friday and Monday, which stood at $86.68 million and $110.17 million respectively.

Throughout the trading day, the exchange rate fluctuated between an intra-day high of N1,317 and a low of N1,000, indicating a disparity of approximately 30% between the upper and lower bands. Concurrently, black market sources reported a surge in demand, pushing the dollar’s value closer to N1,300/$1 by late Tuesday.

In contrast, the Central Bank of Nigeria’s data for April 22nd revealed a marginal climb in Nigeria’s external reserve position, reaching $32.109 billion from $32.106 billion in previous days.

Over the weekend, Central Bank Governor, Yemi Cardoso, proudly declared the Naira as the best-performing currency globally as of April 2024. This accolade follows a series of foreign exchange market reforms and has been bolstered by positive sentiment from leading international investment institutions, as announced during a press briefing on the sidelines of the World Bank/IMF Press briefing in Washington DC, United States.

Notably, the Naira’s fortunes have dramatically improved since March when it plunged to lows of N1,600/$1 on the official market and N1,800/$1 on the parallel market.

Addressing concerns regarding the central bank’s intervention in the market, Cardoso explained that the observed fluctuations were a result of market forces at play rather than deliberate currency defense measures. 

“Again, to be honest, I think we should expect that there will be increases here and there, ups and downs and even from what you’ve reported yesterday, from what I gather, the naira has begun strengthening overnight,” he said.

“So I think the most important thing to say here is that we are doing everything possible to ensure that we have a stable exchange rate and an exchange rate that finds its adequate price discovery level. That is a process that will continue.”

Meanwhile, the Central Bank issued a new circular to all Bureau De Change (BDC) operators, announcing a fresh sale of forex at a reduced rate of N1,021 per dollar. This move marks the second such occurrence this month and the fourth instance this year, underscoring the CBN’s proactive approach to managing currency volatility and ensuring the availability of essential foreign exchange.

The recent initiative builds upon previous interventions, including the distribution of $20,000 to each BDC in February at a rate of N1,301 per dollar, subsequent adjustments during the second disbursement, and a sale at the beginning of April offering $10,000 to each BDC at a rate of N1,101 per dollar.

The CBN boss also disclosed that the response from the foreign portfolio investors (FPI) has been positive.

“They’re part of a process of continuous engagement. And it is so critical that we use any opportunity we can to dialogue with investors and to update them on the state of the reforms that have taken place,” he said.

“The response from the foreign portfolio investors has been very positive and it shows in the numbers and we expect from what the reactions that we got during the course of the past few days, that positive sentiment will continue to improve.”