By 
The Nigerian naira has seen a further decline on the parallel foreign exchange market, reaching N995 to a US dollar, which is weaker than the N990 to a dollar rate observed the previous day. Conversely, on the Investors and Exporters (I&E) foreign exchange window, the naira gained N33, closing at N738 to a US dollar on Thursday, compared to N771 to a dollar the day before. Some market analysts believe this improvement may be attributed to a potential intervention by the Central Bank of Nigeria (CBN).
Addressing the challenges facing Nigeria’s currency, Finance Minister and Coordinating Minister of the Economy, Olawale Edun, explained that addressing approximately $6.8 billion in overdue forward payments in the foreign exchange market is essential for stabilizing the naira.
Meanwhile, the Monetary Policy Committee (MPC) of the CBN has postponed its 293rd meeting until further notice. This decision could potentially heighten uncertainty in the market.
According to sources, the notable rise in the daily volume turnover of the I&E FX Window, reaching $218.68 million on Thursday compared to $64.36 million the day before, may be attributed to the regulator’s intervention.
The highest spot rate recorded during the day was N799.9/$1, while the lowest spot rate was N701/$1. With the parallel market at N995/$1 and the official I&E window closing at N738/$1, the gap between the official and parallel market rates has widened to N257.
Edun stated that addressing the overdue contracts would increase liquidity in the market, allowing the naira to strengthen. He emphasized that liquidity improvement is tied to ongoing fiscal and monetary reforms, trust-building, and confidence restoration.
The Central Bank has been less active this month, with limited dollar supply to the official window, which has accelerated the naira’s depreciation. The dwindling supply of dollars from the Central Bank has led to increased demand for hard currency on the streets.
Nigeria’s inflation has also reached its highest level in over 18 years, prompting economists to predict that the Central Bank might raise interest rates at its next meeting, which is now deferred to an unspecified date.
Edun stressed the commitment to maintaining existing reforms, enhancing the FX market, narrowing the rate gap, and boosting supply to counteract speculative pressures.
Nigeria primarily relies on oil and gas exports for over 90% of its foreign exchange, but limited crude oil production by the Nigerian National Petroleum Company Limited (NNPC) has led to a shortage of dollars.
The MPC’s delay in holding its meeting could be attributed to the leadership transition at the apex bank. The suspension of former CBN Governor Godwin Emefiele and subsequent changes in leadership have created uncertainty. Olumemi Cardoso, nominated as the new central bank governor, is awaiting Senate approval, and this leadership vacuum might impact MPC meetings. Shonubi, the acting governor, presided over the last MPC meeting in July.
Comments