Naira Reverses 2 Days Gain, Falls by N80 Against US Dollar After CBN’s Decision

Naira Reverses 2 Days Gain, Falls by N80 Against US Dollar After CBN’s Decision

  • Nigerian currency has reversed its gains recorded on Friday last week and Monday against the US dollar
  • Latest data shows that the Naira fell across the United States dollar across all foreign exchange market
  • The fall follows the CBN decision to suspend its Monetary Policy Meeting(MPC) scheduled for Monday and Tuesday

Legit.ng journalist Dave Ibemere has over a decade of experience covering business and the economy

The naira reversed its two-day gain recorded on the official Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, November 21, 2023.

Data obtained from FMDQ securities showed that the Naira at NAFEM closed at N830.97 against the US dollar.

naira to dollar exchange rate
Nigerian currency loses more value Photo credit: s
Source: Getty Images

This represents a 10.8 per cent or N80.83 depreciation compared to Monday, November 20, rate of N750.14/$1.

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The weakening of the Nigerian currency comes as the supply of FX decreased by 30.7 per cent or $54.29 million to $112.46 million from the $176.75 million achieved a day earlier.

Also, the Central Bank of Nigeria (CBN) silence on plans for the foreign exchange market affected the Naira.

Legit.ng reported that the central bank on Monday postponed a rate-setting meeting, known as the Monetary Policy Committee (MPC), for a second time since Olayemi Cardoso became the CBN governor in September.

The meeting is important as it provides insight into solutions for various economic challenges, including inflation and exchange rates.

Naira to Dollar at unofficial market

It was the same story for the Naira in the peer-to-peer (P2P) window, as data shows the Naira declined against the greenback during the session by N9 to sell at N1,136/$1 compared with the previous day’s N1,127/$1.

In the black market, also known as the parallel market, the Naira weakened against the Dollar by N5 on Tuesday to close at N1,145/$1, in contrast to the preceding day’s value of N1,140/$1.

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Expert react

Reacting to the latest Naira exchange rate, Professor of Finance and Capital Markets Studies Uche Uwaleke expressed concern about the approach adopted by the Federal Government to solve Nigeria’s foreign exchange crisis.

He noted that the government's decision to borrow dollars to defend the Naira from further depreciation is not a holistic approach to the country’s forex crisis.

His words:

"The current strategy of the government appears to focus solely on the supply side, involving borrowing dollars to improve liquidity in the near term.
"However, it may not yield significant success unless the unbridled demand for forex is addressed."

Nigeria Customs sets new exchange rate to clear imported goods

Earlier, Legit.ng reported that Nigeria customs adjusted the foreign exchange rate for clearing imported goods at Nigerian ports

The new rates were intended to reflect the depreciation of the Naira against the Dollar across the foreign exchange markets.

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Naira closes at N869.39/$1 in official market, falls further in black market

With the new rate, the cost of imported goods will increase nationwide.

Source: Legit.ng

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