On Wednesday, the naira concluded trading at N1035.12/$ on the official Investor and Exporter foreign exchange market.
According to FMDQ Securities Exchange data, this is a 4.72 percent decrease from the N988.46/$ it closed trading on Tuesday.
The national currency has declined in the first two trading days of 2024, and Wednesday’s close is only the third time it has ended above N1,000/$ since the Central Bank of Nigeria abolished its rate cap.
The naira plummeted to an all-time low of N1,099.05/$ on the I&E window on December 8, 2023, before recovering somewhat to N1043.09/$ on Thursday, December 28, 2023.
The naira began trading at N932.67/$ on Wednesday. Before closing at N1035.12/$, it reached an intraday high of N1,224/$ and a low of N700/$. The total FX turnover for the day was $85.68 million.
The naira’s poor start to 2024 is despite the Federal Government’s recent receipt of a $2.25 billion foreign exchange support facility from the African Import-Export Bank.
According to Wale Edun, Minister of Finance and Coordinating Minister for the Economy, the first tranche of the bank’s $3.3 billion facility is aimed at alleviating currency shortages in the economy.
This loan is part of a facility announced by Nigerian National Petroleum Company Limited in August 2023.
The naira is one of the worst-performing currencies. Bloomberg predicted that the euro would have one of its worst years in 2023, and that 2024 would be no better.
The World Bank reported in its December Nigeria Development Update that the naira had devalued by 41% in the official market and 30% in the parallel market against the US dollar. It stated that higher volume is required for the naira to establish stability in the official market.
It stated,
“Further monetary policy tightening is expected to help underpin the value of the naira. However, there is also a need to increase FX supply in the market. Facilitating FX flows, especially from all exports, through the NAFEM can help provide additional volumes in the official window that can help provide stability.
“In addition, clarity on the CBN’s net reserve position, and on the CBN’s continued progress in clearing the FX backlog, would also strengthen market confidence.”