The naira has weakened further against the dollar on Wednesday, closing at N1,507.83/$1, based on the latest data from the FMDQ, which manages the NAFEM window where currencies are officially traded.
Throughout June, the exchange rate had been stable, fluctuating between N1,470/$1 and N1,480/$1. However, yesterday marked a significant shift as it breached the N1,500 threshold.
Over the past eight days, the naira has experienced a series of marginal depreciations, ranging from 0.02% to 0.71% daily, indicating a fresh trend of decline for what had been a relatively stable currency.
This recent pattern of depreciation suggests potential volatility ahead, raising concerns about the currency’s near-term outlook.
What the data is saying
- According to close-of-day data from the FMDQ, the exchange rate closed at N1,507.83/$1 at the official market on June 26, 2024. This is the lowest since May 16, 2024, when it closed at N1,533.99/$1, maintaining a five-week low.
- The naira depreciated on June 26 by 0.47% from the previous day’s rate of N1,500.79/$1 on the official market.
- Total forex turnover for the day closed at $176.39 million, which was an increase of 28.99% from the $136.75 million recorded the previous day.
- Meanwhile, the intra-day high indicates that the global reserve currency exchanged for as high as N1,523, while it sold for as low as N1,430.91 on the day. The difference between the high and low exchange rates indicates considerable volatility in the foreign exchange market.
What you should know
This wave of depreciation occurred amid the claim by the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, that the country has already experienced the worst of naira volatility regarding foreign exchange.
During an interview on Tuesday in London with Bloomberg TV, Cardoso said he is satisfied with how far they have been able to manage the currency crisis in the past few months.
Regarding whether the naira has reached its peak value or if further appreciation is expected, the CBN chief stated that it depends on “a host of different issues,” implying that the fiscal side plays a significant role in determining the value of the currency.
Cardoso, however, added that it is a work in progress as they will continue to implement certain macroeconomic fundamentals that will positively impact the market.
Nairametrics earlier projected that currency weakness could be imminent due to the summer holidays when Nigerians mostly fly out of the country for vacations.
The depreciation wave indicates a troubling trend for the Nigerian currency, which has been under continuous pressure amid efforts by the CBN to stabilize the currency through various interventions.
