The Nigerian naira has experienced a 26.36% decline against the US dollar in the official Investor and Exporter window of the foreign exchange market since the Central Bank of Nigeria (CBN) announced clearing $2 billion as part of its backlog obligations.
Despite the CBN’s efforts to settle forward contract obligations and alleviate pressure on the exchange rate, the naira closed trading at N1082.32/$ on Wednesday, reflecting a 0.66% increase from the previous day.
This depreciation occurred even as the government received a $2.25 billion foreign exchange support facility from the African Import-Export Bank to address FX shortages.
The Chief Executive Officer of Economic Associates, Dr Ayo Teriba, attributed the naira’s volatility to inadequate foreign exchange supply, emphasizing the need for the government to attract investments to bolster reserves.
In contrast, the President of the Nigerian Economic Society, Prof. Adeola Adenikinju, expressed optimism about a more stable naira in 2024, citing factors such as local refinery operations, increased government revenue, and improved oil production.
However, Financial Derivatives Company predicts continued pressure on the naira in 2024, suggesting a potential fall to N1,350/$ before a recovery in Q2.
