The official exchange rate of the naira against the dollar ended its three-day winning streak, falling by 4.26% to N1602.43 per US dollar on Tuesday, March 5, 2024, compared to N1534.19/$1, according to data published by FMDQ.
This decline coincides with the announcement from the cryptocurrency trading platform Binance that it will cease trading activities involving the Nigerian currency.
The drop on Tuesday marks the first in three days, indicating that demand pressures persist in the forex market as supply remains insufficient.
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FX Rates across markets
According to data from the Nigeria Autonomous Foreign Exchange Market (NAFEM), where forex is officially traded, the domestic currency depreciated by 4.26% at the end of trading, closing at N1,602.43 to a dollar at the close of business.
- This represents a loss of N68.24 compared to the N1,534.19 closing on Monday.
- The intraday high was N1,652.40/$1, while the intraday low was N1,450/$1, representing a spread of N202.40/$1.
- According to data obtained from the official NAFEM window, forex turnover at the close of trading was $291.78 million, representing a 63.26% increase compared to the previous day.
- Forex turnover has averaged over $200 million in the past week as trading continues to pick up in the official market.
Meanwhile, on the parallel market, the Naira depreciated against the dollar as it was quoted for N1,630/$1, reflecting 1.84% compared to the previous day’s quote of N1,600.
- The Great British Pound (GBP) depreciated by 7.32% to close at £1/N2050 as against £1/N1,900 the previous day.
- Additionally, the Naira weakened against the Euro by 0.57%, trading at N1750/EUR1 compared to N1740/EUR1 reported the previous day.
At above N1,600/$1, the exchange rate between the naira and dollar is down by 43% in 2024 and remains one of the worst currencies in Sub-Saharan Africa. This is despite several policy measures introduced by the apex bank to resolve the forex crisis.
Officials close to the central bank have often cited the activities of cryptocurrency traders as a major contributory factor to the exchange rate depreciation. Critics of this government stand will point to the depreciation of the naira as further evidence that the naira is inherently weak with or without the activities of cryptocurrency traders.
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