Naira Experiences Sharp Decline, Hits N1089/$ On Official I&E Window

Naira Experiences Sharp Decline, Hits N1089/$ On Official I&E Window

The official Investor and Exporter window witnessed a substantial decline in the Nigerian naira, reaching N1089.51/$ on Tuesday, marking a 27.19% drop from the previous day’s closing rate of N856.57/$, as reported by FMDQ Securities Exchange. The day’s trading began at N922.22/$, peaked at N1251/$, dipped to a low of N720/$, ultimately concluding at N1089.51/$, with a total forex turnover of $97.45 million…….CONTINUE READING

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This marks the fourth instance where the naira closed below N1,000 on the official window. Notably, on December 8, 2023, the naira plummeted to an unprecedented low of N1,099.05/$, and subsequent closings on December 28, 2023 (N1043.09/$) and January 3, 2024 (N1035.12/$). Tuesday’s rate of N1089.51/$ stands as the second lowest since the removal of the currency rate cap by the Central Bank of Nigeria.

Despite efforts by the Central Bank to address forex obligations, including the payment of $2 billion to clear backlog obligations, reports suggest outstanding forward contract obligations amounting to $7 billion. The CBN, acknowledging this, disclosed disbursements of $61.64 million to foreign airlines as part of matured forex obligations.

Hakama Alia, CBN’s Acting Director of Corporate Communications, emphasized the bank’s commitment to settling valid forward transactions to alleviate pressure on the exchange rate. The ongoing decline of the naira occurs in tandem with government initiatives to enhance liquidity in the forex market, including a $2.25 billion foreign exchange support facility received from the African Import-Export Bank.

Dr. Ayo Teriba, CEO of Economic Associates, attributes the naira’s volatility to inadequate forex supply, acknowledging the government’s efforts to attract investments. Teriba remains optimistic that opening up to investors could bolster forex reserves, stabilize the naira, and boost economic confidence. He underscores the need for swift actions, including expediting initiatives like taking the NNPC to the market and creating avenues for foreign exchange inflows to build reserves and improve the overall FX market.

Teriba concludes that unless decisive steps are taken, the volatility in the forex market may persist, emphasizing the importance of building robust reserves for a stable currency, lower inflation, economic growth, and improved living standards.

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