Naira depreciates, nears N500/$1 after CBN devaluation

The exchange rate between the naira and the US dollar closed at N411.50/$1 at the Importers and Exporters window, where forex is traded officially, moving closer to the N500/$1 mark at the black market after CBN’s devaluation of the local currency despite a 262 percent increase in dollar supply.

While the Naira appreciated against the US dollar in the early hours of Thursday at the official NAFEX window to close at N411.50 to a dollar, it however depreciated at the parallel market, closing at N493/$1, representing a N6 drop when compared to the N487/$1 that was recorded the previous day.

The Central Bank of Nigeria moved towards exchange rate unification as it further adjusted the exchange rate and formally adopted the NAFEX rate as the official rate.

An exchange rate of N429.37 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.50/$1. It also sold for as low as N387.67/$1 during intra-day trading.

Forex turnover at the Investors and Exporters (I&E) window increased significantly by 261.6 percent as data tracked from FMDQ revealed that forex turnover rose from $130.50 million recorded on Tuesday, 25th May 2021 to $471.85 million on Wednesday, 26th May 2021.

Nigeria’s external reserve plunged further by $7 million on Tuesday, 25th May 2021, to close at $34.287 billion.

The nation’s foreign reserve declined from $34.294 billion recorded on Monday, 24th May 2021 to $34.287 billion on Tuesday, representing a 0.02% drop.

Nigeria’s foreign reserve has dipped by $968.1 million since 16th April 2021, when the decline started, while year-to-date, the country’s reserve has dipped by about $1.087 billion.

The decline in external reserves continues despite recent increases recorded in the crude oil market and the various policies by the apex bank aimed at boosting dollar inflow and remittances into the country.

The decline could be attributed to reports of a drop in crude oil exports to India, the biggest buyer of Nigeria’s crude oil and a nation still heavily hit by the Covid-19 pandemic.