Nigerian Naira Weakens to 1,300 Per US Dollar as CBN Releases More Dollars to Stabilize Currency

The Nigerian naira has depreciated significantly against the US dollar, reaching a rate of N1,300.15 per dollar in the Nigerian Foreign Exchange Market (NAFEM) on April 24, 2024. This represents a depreciation of N65.66 from the previous week's rate of N1,234.49 per dollar. The parallel market rate also weakened, with the naira trading at N1,255 per dollar, widening the margin between the NAFEM and parallel market rates to N45.15 per dollar, up from N15.51 per dollar the previous day.

In response to the naira's depreciation, the Central Bank of Nigeria (CBN) has released more dollars to the market in an effort to stabilize the currency. The CBN has been actively intervening in the foreign exchange market, selling foreign currencies to legitimate Bureau De Change (BDC) operators. In the latest intervention, the CBN sold $10,000 to each eligible BDC at a rate of N1,021 per dollar, with the BDCs directed to sell to end-users at a spread not exceeding 1.5% above the purchase price.

This marks the second such occurrence this month and the fourth instance this year, emphasizing the CBN's proactive strategy in managing currency volatility and ensuring the availability of essential foreign exchange. CBN Governor Yemi Cardoso expressed optimism, stating that the naira is the best-performing currency globally as of April 2024 and that the central bank is doing everything possible to ensure a stable exchange rate.

Why this matters: The naira's depreciation has significant implications for trade, economic stability, and the cost of living in Nigeria. The CBN's interventions aim to mitigate further depreciation and maintain stability in the foreign exchange market, which is critical for businesses, investors, and the general population.

Despite the recent volatility, positive sentiment from foreign portfolio investors and the CBN's interventions have contributed to improvements in the naira's fortunes. Finance Minister Wale Edun and CBN Governor Yemi Cardoso are set to lead a meeting on Wednesday to discuss strategies for strengthening the naira, involving representatives from the IMF, economists, experts, and stakeholders from various sectors. The roundtable aims to address sectoral issues impacting the local currency's value and explore ways to fortify its purchasing power both domestically and internationally.

Key Takeaways

• Naira depreciated to N1,300.15/$ in NAFEM, widening gap with parallel market.
• CBN intervened by selling $10,000 to each BDC at N1,021/$ to stabilize currency.
• CBN claims naira is best-performing currency globally as of April 2024.
• Naira's depreciation impacts trade, economy, and cost of living in Nigeria.
• Govt. to hold roundtable to discuss strategies for strengthening naira's value.