The Nigerian Naira dumped to N1,300/$ at the parallel market on Tuesday.
This is as it closed trading on the Peer-to-Peer cryptocurrency window at N1,315.3/$1 on the day. Bureau de Change Operators confirmed the parallel market rates.
An Abuja Bureau de Change operator at Zone 4, Magaji Muhammed, said the rate increased to N1,300/$ on Tuesday.
He said, “Currently, we are selling for N1,300/$. We are witnessing more demand and that’s why.”
Another BDC operator, Abubakar Taura, however, noted that he could only sell for N1,280 per dollar. “I can sell for you at N1,280/$ and that is the highest I can go.”
On the Binance P2P platform, the naira closed at N1,315.3/$1. According to Chainalysis, a blockchain firm, Nigeria has one of the largest peer-to-peer exchange volumes in the cryptocurrency market. According to the details from the FMDQ OTC Securities Exchange, the naira closed trading at N878.57/$ on the Investor and Exporter Window of the foreign exchange market.
The naira’s continued fall is despite efforts by the government to boost liquidity in the official market. Dollar supply on the official Investor and Exporter window has fallen by 89.13 per cent in the last five days despite recent moves by the government to boost liquidity in the official market.
On Wednesday, January 10, 2023, foreign exchange turnover on the I&E Window was $242.60m, this crashed to $26.37m on Monday 15, 2023.
This is despite the recent announcement the Nigerian National Petroleum Company Limited has gotten $2.25bn of a $3.3bn oil-for-cash loan facility from the African Export-Import Bank to boost FX liquidity.
Commenting the fund, Afreximbank President and Chairman of the Board of Directors, Professor Benedict Oramah, said, “The disbursement of the initial $2.25bn under the facility will support Nigeria’s long-term economic stability, ease access to import financing for raw materials and essential goods, and support industrialisation and trade development efforts.
“We are pleased that despite the typical year-end pressures, our partners and investors committed the funds required in record time. We thank them for their support.”
The NNPCL Group Chief Executive Officer, Mr. Mele Kyari, noted, “The proceeds of the facility have been made available to the Federal Republic of Nigeria as one of several efforts towards improving macro-economic stability. The participation of global, international, and regional syndication firms is a further testament to the lending market’s appetite for financing sponsored by NNPCL and signifies solid market confidence in Nigeria.”
In December, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated that the loan was aimed at resolving FX shortage in the economy.
Other efforts made by the government include the recent Central Bank of Nigeria repayments of $2bn to clear part of its backlog of matured foreign exchange obligations to the Deposit Money Banks.
The CBN Acting Director of Corporate Communications, Hakama Sidi Alia, commented, “These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate.
“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira hug against other major world currencies and further increase investor confidence in the Nigeria economy.”
Liquidity is yet to return to the market as the national currency has hovered around and above N1000 against the dollar consistently on the official I&E in 2024.
Recently, the President of the Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, told newsmen that the naira would slide to N1300/$ in the first quarter of 2024 in the parallel market.
He however, noted, “As the apex bank continues to walk their talk in the second quarter of 2024 in lifting capital control, clearing backlog, enhancing market confidence, diversifying foreign inflows we will begin to see the convergence of the official and official market levels.
“Finally, we expect the naira to end in 2024 at N900/$ with the full convergence of both the official and unofficial markets.”
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