Nigerian Naira Weakens Against Major Currencies Amid Concern Over FX Reserves

On Tuesday, April 16, the Nigerian Naira depreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM), marking its first loss against the Dollar in a while. The decline was attributed to concerns about the depletion of the country's foreign exchange reserves, which have decreased by 6.2% or $2.16 billion in 29 days. The Naira weakened by 1.07% against the Dollar, selling at N1,148.14/$1 compared to the previous closing rate of N1,136.04/$1.

Nigerian Naira Depreciates Against Major Foreign Currencies Amid Foreign Exchange Reserve Concerns

Lagos, Nigeria - The Nigerian Naira witnessed a decline in value against the United States Dollar on Tuesday, April 16, 2023, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), raising concerns about the depletion of the country's foreign exchange (FX) reserves.

In the official market, the Naira weakened by 1.07%, or N12.10, to sell at N1,148.14/$1, a departure from the previous day's closing rate of N1,136.04/$1. The depreciation is attributed to uncertainties surrounding the country's FX reserves, which have faced a significant decline in recent weeks.

The Naira also lost ground against the British Pound Sterling and the Euro in the spot market. Against the Pound, it depreciated by N28.80 to close at N1,446.45/£1,相比于星期一的N1,417.65/£1. Against the Euro, it lost N22.87 to settle at N1,234.79/€1, compared to N1,211.92/€1 previously.

The decline in the Naira's value coincided with an increase in the value of forex trades recorded at NAFEM on Tuesday. The total volume of forex trades closed at $268.75 million, an increase of $17.15 million, or 6.8%, compared to the $251.60 million reported the previous day.

These developments come amid concerns about Nigeria's FX reserves, which have experienced a significant downturn of approximately 6.2%, or $2.16 billion, over the past 29 days. The Central Bank of Nigeria (CBN) has been actively intervening in the foreign exchange market to stabilize the Naira.

As of April 15, 2023, data from the CBN revealed that the external reserves stood at $32.29 billion, a decline from $34.45 billion recorded on March 18, 2023. This depletion of reserves has raised questions about the sustainability of the CBN's efforts to support the Naira.

Despite the concerns in the official market, the Naira appreciated against the Dollar at the parallel market, gaining N15 to sell at N1,100/$1, compared to the previous session's N1,115/$1.

In the digital currency market, most tokens tracked by Business Post showed signs of recovery, with Solana (SOL) leading the gains by rising 3.1% to $138.95. The increase came as SOL-powered decentralized exchange Drift announced plans to roll out its governance token alongside a 100 million token airdrop.

Other digital currencies that experienced value appreciation include Dogecoin (DOGE), which gained 0.9% to $0.156; Litecoin (LTC), which rose 0.8% to $79.03; Bitcoin (BTC), which increased 1.6% to $63,926.08; Ripple (XRP), which jumped 1.5% to $0.4976; and Ethereum (ETH), which gained 0.9% to $3,091.61.

However, Binance Coin (BNB) declined by 0.7% to trade at $543.01, while Cardano (ADA) depreciated by 0.5% to $0.4572. The US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.

The recent developments in the Nigerian foreign exchange market and the digital currency space have raised questions about the long-term stability of the Naira and the sustainability of the CBN's interventions. Analysts are closely monitoring the situation and expect further volatility in the coming weeks.