The Nigerian Naira fell slightly against the United States Dollar on Monday, according to the last update from the Central Bank of Nigeria.

The local currency was exchanged at N414.89 per dollar on Friday before depreciating by N0.11 or 0.03 percent to N415 on Monday.

It should be recalled that the Naira plunged to N435 against the United States on Friday 31, December 2021 when the Central Bank of Nigeria (CBN) adjusted its exchange rate by N2 to accommodate the change in Nigeria’s economic realities.

The Naira has now improved by about 4.6 percent against the United States Dollar from the year to date. The improvement was after the market digested and interpreted the CBN action as the usual forex devaluation in line with the apex bank policy.

At the unregulated black market, traders in Abuja sold the greenback at N570 a unit and buy it at N569. CBN had attributed Nigeria’s forex challenges to the activities of black market operators and warned Nigerians to stop patronising that section of forex.

Meanwhile, the crypto space remained bearish across the board ahead of US Federal Reserve rate decisions. Bitcoin to Naira exchange rate declined by 2.5 percent to N17.346 million in the last 24 hours while Eth shed 3.6 percent.

Other cryptocurrencies suffer the same fate as Binance coin, Tether, Cardano and XRP depreciated by 3.70 percent, 0.31 percent, 1.72 percent and 2.93 percent.

Bitcoin looks vulnerable above the $41,000 support level, largely due to the drop in capital inflow into the crypto space ahead of a possible interest rate increase in the world’s largest economy, the United States.

“Bitcoin continues to look vulnerable having failed to bounce back strongly off the recent lows. It appeared to be gathering some upside momentum at times last week but it quickly ran into resistance just shy of $45,000 where it had previously seen support. All eyes are now on $40,000 and whether we’re going to see another run at that major support level,” said Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA, in an email to Investors King.

The Nigerian Naira gained 1.58 percent or N7.56 against the United States Dollar at the official forex market on Wednesday.

The local currency opened the day at N423.56 to a US Dollar before improving in value to N416 against the greenback. At the official forex window managed by the FMDQ Group, investors traded $114.95 million on Wednesday.

The improvement in Naira value was after the market had digested the Central Bank of Nigeria’s currency adjustment. The central bank had adjusted the Naira to Dollar exchange rate by N2 from N411 to N413 on Friday, leading to devaluation outcry across Africa’s largest economy.

On Friday, the Naira plunged to as low as N435 against the United States Dollar at the official forex trading market and N575 at the unregulated parallel market, popularly known as the black market, before moderating to N416.

Meanwhile, bitcoin and other cryptocurrencies plunged across the board. Bitcoin depreciated by 7.16 percent to $43,058 per coin in the last 24 hours. The decline does not stop there as the second most capitalised digital asset, Eth dipped by 9.77 percent to $3,441.

Solana, Ripple (XRP), Luna and Cardano (ADA) lost 11.48 percent, 8.13 percent, 9.5 percent and 8.6 percent, respectively.

The decline was after the US Federal Reserve minutes of December 14 – 15 meeting released on Wednesday revealed that policymakers are planning to raise interest rates as early as March 2022 to curb escalating inflation rate. Generally, hawkish monetary policy is negative for cryptocurrency as it drags on capital inflow into the space and encourages investors to look into more stable assets for higher interest rates.

According to The Wall Street Journal, the “Federal Reserve officials at their meeting last month eyed a faster timetable for raising interest rates this year, potentially as soon as in March, amid greater discomfort with high inflation.

“Minutes of their Dec. 14-15 meeting, released Wednesday, showed officials believed that rising inflation and a very tight labor market could call for lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.”

The Nigerian Naira opened the new year at N426.25 against the United States Dollar on Tuesday, January 4, 2022, at the official foreign exchange window managed by the FMDQGroup.

The local currency plunged to N435 against the US Dollar on Friday after the Central Bank of Nigeria (CBN) adjusted its Naira to Dollar exchange from N411 to N413.49. The adjustment is in line with Godwin Emefiele, governor of the CBN, statement that the country operated a managed-float exchange policy.

Naira pared losses against the US Dollar on Tuesday after forex traders, speculators and hoarders might have analysed CBN forex action and interpreted it as the usual adjustments.

At the unregulated parallel market known as the black market, the Naira plunged to N570 against the United States Dollar on January 4th, 2022. Despite the Central Bank of Nigeria (CBN) discouraging patronage at that section of forex, many Nigerians still relied on the black market for their forex needs.

However, the adjustment may not be unconnected to the change in Nigeria’s economic fundamentals. For instance, the nation’s foreign reserves used to back the Naira have been on a downward trend since hitting $41.8 billion on October 29, 2021. Presently, the reserves stood at $40.5 billion. This is despite oil prices trading at almost $80 a barrel, the highest in recent years.

But because of Nigeria’s inability to improve its production process, lower cost of production and generally increase crude oil output, it has failed to take advantage of the surge in oil prices. Therefore, the CBN adjusted Naira to Dollar exchange rate to reflect the nation’s economic reality of insufficient forex and also enable it meet demands.