Yesterday, the Naira reversed its almost miraculous comeback to trade over the N700/$1 mark once again. This is according to information gathered from several black market forex traders, who spoke to newsmen.
The last time the Naira reached the 700/$ range was on July 27, 2022, a Wednesday.
However, the latest decline in the Naira comes following a 34.3% decline in FX turnover, from $82.38 million on Friday, August 26, 2022, to $54.13 million on Monday.
The Naira’s depreciation follows reports that the Central Bank of Nigeria has released $265 million to save the Aviation sector, with a portion of it going to pay blocked funds owing to foreign airlines.
The recent drop in the market has been attributed by Bureau De Change operators to a scarcity of FX and an increase in demand.
Again, Naira Falls At Black Market (See Exchange Rate)
According to BDC operators, the Naira is now trading at N705/$. Similarly, the rate on the cryptocurrency P2P Exchange market has dropped to N701.89/$1.
The crash of the Naira comes despite the central bank’s interest rate hike to 14% in July 2022 and the savings deposit interest rate increase from 1.4% to 4.2% in order to curb rising inflationary pressure as well as encourage FX inflow into the economy.
The reserve level had fallen dramatically year to date as a result of the CBN’s ongoing intervention in the official FX market to limit exchange rate volatility. Nigeria’s external reserves declined by 3.3% on Tuesday, 30th August 2022 to stand at 39.181 billion from $40.520 Billion recorded in 31st December 2021. This is indicative of a $1.339 billion Year to date.
According to the apex bank, foreign exchange inflows through the RT200 FX Programme surged significantly in Q1 and Q2 of 2022, reaching around US$600 million as of June 2022.
Nonetheless, the rise in foreign exchange inflows via the RT200 FX does not appear to be adequate to alleviate Naira concerns.