Despite multiple interventions by the Central Bank of Nigeria to defend the Naira, the Naira fell by N22 in the first quarter of 2022.
At the official Investors and Exporters (I&E) market, the naira-US dollar exchange rate has remained constant at N417/$1. The black market, on the other hand, has maintained its bearish trend pushing the Naira towards N600/$1.
To safeguard the Naira, the Central Bank has implemented a plethora of restrictions, ranging from prohibiting the selling of dollars to BDCs to prohibiting the broadcast of black market rates on AbokiFX.
What you should know
- In the parallel market, the Naira fell against the US dollar, closing at N565/$1 on December 31, 2021, compared to N460/$1 at the end of 2020.
- Similarly, the black market exchange rate closed negative on the 31st of March 2022 at N587/$1, indicating a N22 depreciation when compared to the N565/$1 on the 31st of December 2021.
- In February 2022, the CBN extended the Naira for Dollar scheme from the IMTOs to the IEFX window. Specifically, the CBN released instructions that outline that it will facilitate a payment of N65 for every US dollar repatriated and sold at the Investors and Exporters Window.
- The CBN’s stated goal with the RT200 Program is to raise $200 billion in non-oil foreign exchange earnings over the next 5 years in an effort to save the value of the Naira.
- The Naira faces additional depreciation as a result of dividends declared by big firms in the local equities market to their owners, which also includes international investors who wish to repatriate their funds.
- GTCO, Zenith Bank, Dangote Cement, Lafarge Africa, Access Bank, Nigerian Breweries, and MTN Nigeria, among others, have all declared final dividends in naira for their fiscal year 2021.
- Inflationary pressures, Inflation Rate Differential, Balance of Trade problems, Foreign reserves balances, Interest rate differentials, and other factors all exert pressure on the Naira exchange rate.
Recently, the question if Naira could receive crude oil exports in Naira was answered by the DMO. The Debt Management Office (DMO) said the moves will translate to external reserves and currency decline for Nigeria.