More worries for the Central Bank of Nigeria (CBN) that has been struggling to improve the fortunes of the embattled local currency as the Naira on Monday fell to a record low of N1,348.63 per dollar at the official market, known as NAFEM.
Metrobusinessnews.com (MBN) checks reveal that strong demand on the greenback was responsible despite the news of the additional release by CBN of $500 million to various sectors in its determination to address the backlog of verified foreign exchange transactions.
The development represents 33.87% or N456.73 weaker than N891.90 recorded at the close of trading on Friday.
At the parallel market also, Naira performed woefully exchanging for N1460/$
The observed depreciation at the official market was considered unprecedented and stands as the lowest point in the historical performance of the Naira, reflecting the severity of the current economic challenges with the local currency osilating beyond the psychological exchange rate of N1,000/$ threshold.
This latest depreciation marks the sixth time the Naira has breached the N1,000/$ threshold in the official market, highlighting a worrisome trend of weakness.
The first instance occurred on Friday, December 8th, 2023, when the currency reached a historical low of N1,099.05 per dollar. This was followed by a brief reprieve before a second depreciation on Thursday, December 28th, 2023, closing at N1,043.09 per dollar.
These developments represent a significant turning point for the Naira.
CBN, has recently stepped up efforts at saving the country the national embarrassment, ocassionwd by the rising inflation as well as the lowering value of the local currency with the aim of bolstering the foreign exchange market through interventions.
But, respite seems not forthcoming, prompting concerns about the likelihood of more investments leaving the country.
But the analysts are unanimous in their submissions that this development is likely to aggravate existing inflationary pressures and further strain household budgets, particularly for those reliant on imported goods.
The implications for businesses, both large and small, are also significant, with potential increases in production costs and challenges in maintaining profitability.
The domestic currency depreciated by 33.87% to close at N1,348.63 to a dollar at the close of business, data from the NAFEM where forex is officially traded, showed.
This represents an N456.73 loss or a 33.87% decline in the local currency compared to the N891.90 it closed on Friday.
The intraday high recorded was N1414.94/$1, while the intraday low was N701/$1, representing a wide spread of N713.94/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $64.29 million, representing a 36.33% increase compared to the previous day.
However, CBN said that it has released 500 million dollars to various sectors in its determination to address the backlog of verified foreign exchange transactions.
Mrs. Hakama Sidi-Ali, CBN’s Acting Director of the Corporate Communications Department, said this in a statement on Monday in Abuja.
According to the News Agency of Nigeria (NAN), Sidi-Ali said this comes barely a week after the apex bank paid approximately 2.0 billion dollars to settle outstanding commitments across manufacturing, aviation, and petroleum sectors.
She said that the management of the CBN was committed to settling all legitimate foreign exchange backlogs within a short time frame.
According to her a comprehensive strategy to improve liquidity
by the apex bank had begun, through implementation of comprehensive strategy to improve liquidity in the Nigerian foreign exchange markets in the short, medium, and long terms.
“As the Governor said, the CBN’s focus is on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years,” she said.
Sidi-Ali said that the forex market reforms were designed to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities.
She expressed confidence that a stable exchange rate would boost investor confidence and attract foreign investment.
She urged all participants in the market to play by the rules, adding that transparency in the market would enable the fair determination of exchange rates.