The value of the naira against the dollar at the official counter for investors and exporters in the foreign exchange market has fallen by 26.
36% since the Central Bank of Nigeria announced that it had cleared $2 billion as part of its arrears.
On Monday, the apex bank announced it had paid $2 billion out of its outstanding futures contract debt.
The company made the announcement as it said it paid $61.
64 million to a foreign airline as part of a foreign exchange debt maturity.
CBN's Acting Director of Corporate Communications, Mr.
Hakama Sidi Aria, said: ``These payments are a sign of CBN's commitment to liquidate all remaining valid forward contracts to alleviate pressure on the current domestic exchange rate.
"This is an expression of our continued efforts.
"“This initiative by the CBN is expected to significantly strengthen the naira’s support against the world’s major currencies and further boost investor confidence in the Nigerian economy.
On Monday, the Naira closed at 856.
57 Naira/$.
The naira has since crossed 1,000 naira against the dollar, dropping 26.
36% to close at 1,082.
32 naira/$ on Wednesday, according to FMDQ stock exchange data.
This is a slight increase of 0.
66% from Tuesday's closing price of N1089.
51/$.
This is the fifth time the naira has closed above 1,000 naira at official counters since the Central Bank of Nigeria removed the interest rate cap on the local currency.
On December 8, the Naira fell to an all-time low of 1,099.
05 Naira/$, on December 28, 2023, it closed at 1,043.
09 Naira/$, and on January 3, 2024, the Naira traded at 1,035.
12 Naira/$.
The transaction has been completed.
It closed at Nera 1,089.
51/$ on Tuesday (January 9, 2024), the second-lowest currency rate since the official foreign exchange
window closed.
This sharp depreciation of the naira against the dollar is also against the backdrop of new efforts to increase liquidity in the foreign exchange market.
At the end of 2023, Minister of Finance and Coordinating Minister for Economic Affairs Wale Edun announced that the Federal Government had secured a foreign exchange support facility worth US$2.
25 billion from the African Export-Import Bank.
According to the Minister, the first tranche of the bank's $3.
3 billion facility was aimed at addressing foreign exchange shortages in the economy.
Commenting on the reasons for the continued depreciation of the Naira, the CEO of Economic Associates, Dr.
Ayo Teriba explained that the fluctuations in the Naira are due to the lack of supply of foreign currency.
He told The Punch: He explained that the government has made efforts to increase foreign exchange supply through investments, but these have not yet been implemented.
He pointed out that if the government were more open to investors, the country would receive the necessary foreign exchange to increase its foreign exchange reserves and meet the demands of the foreign exchange market.
"I would like to think that the 1,000 naira/dollar rate reflects a shortage of foreign currency," he said, stressing that the recent influx of $2.
3 billion in crude oil futures will not solve the country's supply problems.
The Chairman of the Economic Association of Nigeria, Professor Adeola Adenikinju, said the naira will become more stable in 2024.
"We don't expect volatility to be as high as in 2023," he said but said his prediction was based on three
factors.
He explained: “Firstly, once the local refinery comes online, the demand for foreign exchange will decrease. This is expected to increase the value of the naira.
Second, if governments can generate more revenue without bailouts, inflation will fall.
"The third factor is the increase in oil production.
Improved oil supply and more foreign exchange in the economy will increase the value of the naira.
"
When Punch asked him about his outlook for local currency rates, he said: “In the short to medium term, the naira could be around N1000/$1,000, but if the situation improves, the naira could be around N900/$1 towards the end of the year.
” "/$.
" The financial derivatives firm says the naira will remain under pressure in 2024 as top banks have little power to protect the currency.
This was revealed in a document titled ``2024: The Hard Road Ahead''.
The report said the naira could fall towards 1,350 nebula to the dollar before recovering in the second quarter.
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