The Nigerian naira saw a slight uptick, reaching N1,609 against the US dollar at the official market on Wednesday, marking a marginal increase from its previous rate of N1,615.94. This represents a 0.37% rise, attributed to recent foreign exchange directives issued by the Central Bank of Nigeria (CBN).
The CBN’s move comes in the wake of adjustments to monetary policies, including raising the Monetary Policy Rate (MPR) by 400 basis points to 22.75%. Additionally, the bank adjusted the asymmetric corridor around the MPR and increased the Cash Reserve Ratio, while maintaining the Liquidity Ratio.
Despite these adjustments, the expected impact on the foreign exchange market has yet to materialize, as reflected in the naira’s depreciation by 2.04% against the dollar. Data from the FMDQ securities exchange indicates the dollar was quoted at N1,615.94 on Tuesday compared to N1,582.94 on Monday at the Nigerian Autonomous Foreign Exchange Market.
Officials continue to assert that the current valuation of the naira is undervalued, despite fluctuations in its performance.
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At the parallel market, the naira experienced varied trading rates ranging between N1,300 and N1,500 on Wednesday, compared to N1,550 on Tuesday. Currency operators noted the lack of stability, with rates changing multiple times throughout the day, attributing the volatility to a lack of buyers and increased security interventions.
Furthermore, the delay in BDC operators receiving their promised dollar allocation from the CBN has added to market uncertainties. Despite over 1300 BDCs being listed for allocation, the reason for the delay remains undisclosed. The CBN had pledged to sell $20,000 to each BDC at a rate of N1,301/$, with a margin restriction on resale to end-users.
The dynamic nature of the market underscores ongoing challenges and uncertainties in Nigeria’s foreign exchange landscape.
