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Naira Falls Across Board Amid CBN’s New Exchange Rate Incentive

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira remained under pressure despite the Central Bank of Nigeria’s efforts at propping up the value of the currency against its global counterparts.

At the Central Bank of Nigeria’s official forex section,  a US dollar which was exchanged at N416.52 on Friday now goes for N416.59; Pounds Sterling to naira also dropped from N557.5953 to N558.2306 and Euro exchange now at N466.3725 from N465.9609.

Investors King recalls that on Friday, the apex bank announced that it will pay N65 for every US$1 repatriated and sold at the I&E Forex Window to Authorised Dealer Banks (ADBs) for other third party use. While N35 will be paid for every US$1 repatriated and sold into I&E Window for personal use on eligible transactions.

The new CBN exchange rate incentive was introduced to discourage merchants from patronising black markets and enhance naira appreciation. 

Despite the incentive introduced to stabilise forex earnings, ensure sustainable forex inflows and regulate persistent forex shortages, the naira is yet to gain against its global counterparts.

At the Investors and Exporters Forex Window, the foreign exchange market on Tuesday opened at N415.58 to a US dollar and closed at N416.67, representing a decline of 0.02%. Investors and Exporters transacted $121.54 million for the day. While at the unregulated black market, the local currency remained under pressure at N566 to a Dollar.

Foreign Reserves

For two weeks Nigeria’s external reserves was below $39.863 billion, the rate for Monday. The least amount in the two weeks however was $39.777 billion.

The consequent falling and rising could be traced to the inadequacies of the nation’s export commodities which in turn affect its foreign revenue generation.

Cryptocurrency to Naira

At the cryptocurrency market on Wednesday, the XRP is exchanged at ₦322.59 per coin with a total market value of ₦15.03 trillion adding up 1.12 percent. It was the lowest price on the cryptocurrency market.

The Bitcoin to Naira exchange rate stood at ₦25,191,612 per coin, gaining 2.80 percent with its market capitalisation hitting ₦477.94 trillion

Ethereum to Naira exchange rate traded at ₦1,241,904 with a market capital value of ₦148.77 trillion, gaining 2.16 percent. Also, the Binance Coin sold for ₦235,736 with a market value of ₦39.64, adding up 5.37 percent.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 25th July 2024

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Naira Exchange Rates - Investors King

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of July 25th, 2024 stood at 1 USD to ₦1,595.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,580 and sold it at ₦1,570 on Wednesday, July 24th, 2024.

This indicates a decline in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,595
  • Selling Rate: ₦1,585

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Naira Hits Five-Month Low Amid Dollar Demand Surge

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Naira to Dollar Exchange- Investors King Rate - Investors King

Nigeria’s naira extended its losing streak to a fifth consecutive day as it slipped to its weakest level since March despite the Central Bank of Nigeria’s (CBN) interventions.

The naira closed at 1,577.29 per dollar on Monday, down from Friday’s N1,563.8 per dollar on FMDQ.

This decline comes despite the CBN’s efforts to stabilize the currency by injecting $122.7 million through dollar sales into the market.

However, analysts argue that these amounts were insufficient to balance the robust domestic demand for the greenback.

“The CBN has been in the market selling $50 million from time to time, which is not enough,” commented Carlo Morelli, senior portfolio manager at Azimut Investment SA.

Morelli attributes the persistent pressure on the naira to capital outflows and a lack of investor confidence in the currency, despite the central bank’s commendable efforts in tightening monetary policy and reducing naira liquidity.

Central Bank Governor Olayemi Cardoso has aggressively raised interest rates in an attempt to curb inflation and stabilize the naira.

The benchmark borrowing rate now stands at 26.25%, following an increase of 14.75 percentage points since May 2022.

However, the currency has weakened by approximately 70% against the dollar since exchange-rate controls were eased last year.

“Restoring foreign exchange broad confidence is the last step, and the huge volatility in May delayed the return to normalcy,” Morelli added.

“Many foreign investors are still waiting for more evidence of stability before considering Nigeria investable.”

The naira’s decline makes it the second-worst performing currency tracked by Bloomberg in 2024, trailing only the Lebanese pound.

The recent depreciation has been fueled by both seasonal dollar demand and ongoing investor skepticism.

The central bank’s next policy decision, set for July 23, is expected to address these issues. Monday’s data showing annual inflation quickened to 34.2% in June suggests that another rate hike might be on the horizon.

In a bid to bolster the naira, the central bank has increased Nigeria’s foreign exchange reserves to $35 billion as of July 8, the highest level since May 30, 2023.

This boost is attributed to recent loans from the World Bank and the African Export-Import Bank.

Omobola Adu, an analyst at BancTrust & Co. Investment Bank, noted that recent pressure on the naira has also stemmed from corporates and individuals preparing for foreign vacations.

“Boosting the supply of FX into the country remains crucial for the government to alleviate pressure on the naira,” Adu stated.

He suggested that a eurobond or local dollar bond sale later this year, along with increased support from multilateral institutions, could help shore up reserves.

Despite these challenges, Central Bank Governor Cardoso remains optimistic, asserting that the worst of the currency’s volatility is over.

He reiterated this sentiment on Thursday in Lagos, addressing business leaders and highlighting improvements in crude output and capital inflows as positive signs.

Nigeria, Africa’s largest crude producer, relies heavily on oil sales, which account for at least 80% of its export earnings.

The country’s combined crude oil and condensate output rose to 1.5 million barrels per day in June, the highest since February, according to the upstream petroleum regulatory commission.

“While the naira may be undervalued, for the naira to stabilize and perhaps regain ground, large portfolio and capital inflows are needed,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc in London.

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Naira Plummets to Three-Month Low of N1,530 Per Dollar on Black Market

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New Naira notes

The naira has plunged to a three-month low of N1,530 per dollar on the parallel market, also known as the black market, amid renewed pressure on demand for the greenback by end users.

This represents a 0.65 percent or N10 decline from the N1,520 rate quoted last Friday.

According to data from online sources and street traders, this is the weakest level since March 19, 2024, when the naira was quoted at N1,570 per dollar.

“The dollar’s value has risen due to increased demand from travelers and importers. Currently, we purchase dollars at N1,520 and sell them at N1,530,” a street trader stated in Lagos.

On the official Foreign Exchange (FX) market, however, the naira saw a slight gain.

It appreciated by 0.70 percent on Friday, closing at N1,509.67 per dollar compared to N1,520.24 on Thursday, according to data from the FMDQ Securities Exchange Limited.

Despite this appreciation on the official market, the parallel market continues to experience significant volatility.

The dollar supplied by willing buyers and sellers decreased by 32.64 percent, falling to $116.88 million on Friday from $173.51 million recorded on Thursday. This drop in supply further exacerbates the pressure on the naira in the parallel market.

The intraday high on Friday closed at N1,535 compared to N1,550 on Thursday, while the intraday low was quoted at N1,450 on Friday, down from N1,430 on Thursday.

Economic analysts suggest that the disparity between the official and parallel market rates indicates underlying issues in Nigeria’s foreign exchange management and economic policies.

The continuous demand for dollars by travelers and importers highlights the challenges faced by the Central Bank of Nigeria (CBN) in stabilizing the naira.

As the demand for the dollar remains strong, the naira’s depreciation could have far-reaching effects on the economy, including increased inflation and higher costs of imported goods.

The CBN may need to implement additional measures to address the ongoing demand and supply

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