The Nigerian Naira had a sharp decrease at the end of April, officially finishing at N1,390.96/$1 in the NAFEM, the official exchange rate market.
This rate indicates a notable decline from its mid-month high of N1,072.74, as well as a 5.8% decline from the month’s opening rate of N1,309.39.
In the first part of April, the naira strengthened versus the dollar as many central bank policy measures seemed to have suppressed speculation.
However, following the IMF Spring Meetings, the situation deteriorated daily as the top bank addressed worries about the external reserves.
In the meantime, this marks the Naira’s eighth consecutive decline since it last strengthened to as high as N1,072/$1, after early excitement over the central bank’s foreign exchange policies.
The unofficial prices cited on the black market were marginally higher; Nairametrics’ data collection revealed a range of N1,350 to N1,380/$1.
The exchange rate closed at N1,390.96/$1 on Tuesday, April 30, up slightly from N1,419/$1 the day before, according to statistics from FMDQ.
Extreme volatility was seen in the intraday trade, which saw highs of N1,450 and lows of N1,200.
The volume of forex transactions today was $225.36 million, a dramatic decrease from the $309 million registered on Friday.
The official market’s total currency turnover for the month of April was $3.94 billion, a considerable drop from the $5 billion recorded in March.
This implies that there has been a significant decline in forex activity on the official market.
Nonetheless, the external reserves have kept up their gradual increase, and as of right now, they stand at $32.13 billion, only slightly more than the $32.109 billion recorded the previous week.
Rising demand for dollars, a strengthening US currency, and rising inflation rates are all responsible for the recent collapse in the exchange rate.
Furthermore, a notable fall in forex turnover has also contributed significantly to the currency’s depreciation.
Yemi Cardoso, governor of the central bank, said that market factors implying “ups and downs” with rates are the reason why exchange rate volatility is projected to persist.
Nigeria’s economic stability is seriously threatened by this erratic foreign exchange market, which affects imports and inflation rates.
After the March 28 meeting of the monetary policy committee, the Central Bank decided to increase the policy rates from 22.75% to 24.75%.
With the Debt Management Office selling trillions of dollars’ worth of Treasury bills at yields above 19%, this move laid the stage for rising interest rates and an inflow of foreign exchange.
In addition, the Central Bank started selling foreign exchange to Bureau De Change (BDC) operators again after lifting an earlier prohibition and enacting new regulations meant to prevent corrupt activities and speculation.
The top bank offered BDC operators foreign exchange at prices that were much cheaper than those listed on the official NAFEM market.
Reports appeared that the nation’s external reserves had dropped by more than $2 billion, to their lowest point in two years, as the IMF Spring meetings drew near.
The CBN insisted that the decrease in reserves was consistent with payments that were past due rather than the result of defending the naira.
One Binance officer was still at large as the trial of the jailed officials proceeded.
Furthermore, according to the EFCC, 34 alleged currency speculators were arrested for suspected foreign exchange fraud by agents connected to the Taskforce on Currency Mutilation, Dollarization of the Economy, and Forex Malpractice.
