The exchange rate between the naira and the dollar fell to N1,484.75 on Thursday, May 30, 2024, marking the second consecutive day of decline.
Earlier in the week, the naira had shown unexpected strength, appreciating to N1,173.88 on Tuesday, its best performance in over two months. This surprising gain was first indicated on Monday, when the naira closed at N1,339.33 against the US dollar, sparking hopes of a sustained recovery ahead of the May 29th celebration.
However, the local currency’s rally was short-lived. By Thursday, the naira had slipped back above the N1,400 mark, closing at N1,484.75 as the gains of the earlier days dissipated.
Market Update
The official exchange rate closed at N1,484.75/$1 on Thursday representing an 10.45% depreciation in one day.
- The intra-day high and low also recorded a price of N1,520/$1 and N1,100/$1 respectively representing a disparity of N420/$1.
- Exchange rate disparity between the closing rates, intra-day highs and lows have continued to widened in recent days.
- The NAFEM rate closed at N1,263.88 dated May 29, 2024.
- Meanwhile, the daily turnover $235.41 million representing a 30% drop from a daily earlier when the market recorded a daily turnover of $336.54 million.
- In total, the market has experienced a turnover of about $1.08 billion this week compared to $720.5 million same period last week.
Meanwhile on the parallel market where the exchange rate is sold unofficially, the exchange rate traded between N1,460 and N1,470 to the dollar, in line with the official rate.
What you should know
Earlier in the week, the naira surged N1,1173.88/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window on Tuesday, marking an increase of 14.09% from the previous day’s rate.
This is the highest one-day increase since January 2024, and it comes amidst a significant surge in foreign exchange (FX) turnover, which increased by 81.59% to $328.32 million.
- The naira has experienced consecutive double-digit appreciation on the official market, and sources say that the Central Bank of Nigeria (CBN) has been selling more dollars on the official market in anticipation of a $1.3 billion non-deliverable forward (NDF) maturing today Wednesday, May 29, 2024.
- However, with the NDF’s closed out, it appears the exchange rate is now back to the normal range of between N1400-N1500 to the dollar.
- Nigeria’s external reserves was $32.68 billion as of May 28th 2024, and yet to recover to above the $33 billion levels which was last hit in early April.
Nigeria has continued to seek foreign investor inflows to bolster its foreign currency liquidity which is seen as critical to stabilizing the exchange rate. One of the major monetary policies aimed at driving this inflow is the increase in the country’s benchmark interest rate which now stands at 26.25%.