The naira experienced a further decline on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, closing at N1,603.80/$1 on Thursday, July 25, 2024.
According to data from the FMDQ Securities Exchange, this marks a 1.07% depreciation from the previous day’s rate of N1,586.71/$1. This is the lowest level since March 14, 2024, when the exchange rate was N1,608.98/$1, breaking through the N1,600 barrier.
On Thursday, the naira traded at a high of N1,620/$1 and a low of N1,519/$1 amid significant demand pressure. This depreciation follows just three days after the naira posted its best gains against the dollar since March.
Additionally, foreign exchange (FX) turnover saw a 23.35% decline from $171.03 million to $131.09 million on Thursday.
Despite assurances from the Central Bank of Nigeria (CBN) last week to continue supporting the official markets with liquidity, the naira has faced severe depreciation.
The CBN had announced the sale of $106.5 million in forex to 29 FX dealer banks, marking the second time this month that FX sales were made to authorized dealers in an effort to stabilize the foreign exchange market. Two weeks prior, the CBN sold $122.67 million to 46 authorized dealers.
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In a decisive step to strengthen the naira, the CBN approved the sale of FX to eligible Bureau De Change (BDC) operators, meeting the demand for invisible transactions.
On Thursday, July 18, 2024, the CBN announced the sale of $20,000 to each BDC at the rate of N1,450/$1, the lower band of the trading rate at NAFEM from the previous day.
Despite these efforts, the naira has struggled against severe depreciation this month. The CBN attributed recent foreign exchange market movements to corporate demand pressure and the seasonal summer uptick.
Governor Yemi Cardoso recently stated that the country has likely experienced the worst of the naira’s volatility concerning foreign exchange. In an interview with Bloomberg TV in London, Cardoso expressed satisfaction with how the currency crisis has been managed over the past few months.
Regarding the future value of the naira, Cardoso indicated that it depends on “a host of different issues,” emphasizing the significant role of fiscal policy.
He added that efforts to implement certain macroeconomic fundamentals would continue to positively impact the market. Financial analysts at United Capital Plc forecast that the exchange rate will stabilize, trending between N1,423.26/$ and N1,550/$ by the end of 2024.