Forex

Nigeria’s External Reserves Plummet Amid Scarcity of New Naira Notes

Published

1 year ago

February 21, 2023

Nigeria’s external reserves have taken a hit, with figures obtained from the Central Bank of Nigeria (CBN) revealing a $427.14m fall in just one month.

This decline, which occurred from January 18 to February 16, 2023, has been attributed to the scarcity of new naira notes in the country.

The situation has created a crisis in Nigeria’s currency, causing pockets of protests that have led to the loss of lives and property.

Last year, Investors King reports that the CBN Governor, Godwin Emefiele, announced a plan to redesign the naira notes, which aimed to mop up currency outside the bank vaults. One of the objectives of this policy was to encourage the use of alternative payment channels that would drive digital payment systems in the country.

However, the scarcity of the new naira notes after the deadline has caused president Muhammadu Buhari to direct that the old N200 note should be re-circulated, and it will remain legal tender until April 10, 2023.

The Deposit Money Banks (DMBs) have also started collecting old N500 and N1,000 notes without giving depositors new naira notes in return, further exacerbating the situation.

The scarcity has had a significant impact on the economy, with the Nigeria Employers’ Consultative Association reporting a 40% drop in productive activities in the real sector. The cash squeeze has also impaired the purchasing ability of Nigerians, and thousands of productive hours are lost daily on queues by employees who can’t even get to work.

In response to the crisis, the CBN Governor launched the ‘RT200 FX Programme‘ in 2022 to boost forex supply in the country through the non-oil sector in the next three to five years. The aim of this programme is to repatriate $200bn in FX exclusively from non-oil exports. However, it remains to be seen how effective this policy will be in addressing the current crisis.

The scarcity of new naira notes has caused significant disruptions in Nigeria’s economy and further reduced the country’s external reserves. It is essential for the government and the CBN to find a lasting solution to this crisis and ensure the availability of new naira notes to drive economic growth and development.

Up Next

Dollar To Naira Exchange Rate For Today 23rd February 2023

Don't Miss

Moody’s Warns of Possible Delay in Foreign Currency Loan Payments by Nigerian Banks

Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Comments

Naira

Dollar to Naira Black Market Today, April 19th, 2024

As of April 19th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,100 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

6 hours ago

April 19, 2024

Samed Olukoya

As of April 19th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,100 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,020 and sell it at N1,010 on Thursday, April 18th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,100
Selling Rate: N1,090

Naira

Naira’s Recent Gain Reflects Policy Direction, Says CBN Chief Olayemi Cardoso

Published

1 day ago

April 18, 2024

Samed Olukoya

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), has explained that the recent surge in the Naira is a testament to the positive direction of government policies rather than active intervention to defend the currency’s value.

Addressing attendees at the spring meetings of the International Monetary Fund and World Bank in Washington, Governor Cardoso underscored that the CBN’s intention is not to artificially prop up the Naira.

He clarified that the fluctuations observed in the country’s foreign exchange reserves were not aimed at defending the currency but rather aligning with broader economic goals.

Over the past month, the Naira has experienced a notable uptick in value against the dollar, signaling a reversal from previous declines. Data from Bloomberg reveals a 6.4% decrease in liquid reserves since March 18, coinciding with the Naira’s rebound.

Despite this decline, Cardoso pointed out that around $600 million had flowed into the reserves in the past two days, reflecting confidence in the Nigerian market.

Governor Cardoso articulated the CBN’s vision of a market-driven exchange rate system, emphasizing the importance of allowing market forces to determine exchange rates through willing buyers and sellers.

He expressed optimism about a future where the central bank’s intervention in the foreign exchange market would be minimal, except in extraordinary circumstances.

The recent resilience of the Naira follows a period of volatility earlier in the year, marked by a substantial devaluation in January. Since then, the CBN has implemented measures to stabilize the currency, including monetary tightening and initiatives to enhance dollar liquidity.

Cardoso highlighted the transformation in market sentiment, noting that investors now perceive Nigeria’s central bank as committed to stabilizing inflation and fostering economic stability.

As Nigeria continues its journey toward economic recovery and stability, Cardoso’s remarks provide insight into the central bank’s strategy and its impact on the country’s currency dynamics.

Naira

Dollar to Naira Black Market Today, April 18th, 2024

As of April 18th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,020 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

1 day ago

April 18, 2024

Samed Olukoya

As of April 18th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,020 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,050 and sell it at N1,040 on Wednesday, April 17th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate improved when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.