The Naira continues to experience crash in value despite the central bank fifth intervention in the foreign exchange market.
The underperformance in naira has affected some major investment firm including Goldman Sachs, Financial Derivate Companies, Renaissance, and others.
Nigeria’s foreign exchange crisis got so bad last week that even the monetary authority’s FX injections was unable to reverse the downtrend.
Despite the Central Bank of Nigeria injection of US dollar worth $338 million in the foreign exchange market, the exchange rate closed weaker.
Naira’s exchange rate has been fluctuating between ₦900 and ₦1500 per US dollar.
Other naira bulls’ investment firm had in April joined the predictions that the local currency would rebound.
“Last week, the naira rate plunged further at the official market, closing at ₦1485.99 per US dollar due to weak supply side. FX demand remained elevated across currency markets, causing exchange rates to weaken while the country grapple with US dollar challenge,” said a report.
According to the Nigerian Stock Exchange Limited, foreign portfolio investment inflows surged to ₦93.4 billion in the first quarter of 2024, from N18.1 billion in the corresponding period of 2023. This had positively impacted improvement in exchange rate seen in April apart from FX sales to banks, and bureau de change (BDCs).
“This suggests the apex bank has terminally stopped its $10,000 FX sales to BDCs. This explains why the local currency has seen market wide depreciation. In April, the naira rose to unprecedented heights following the recent FX interventions of the CBN, specifically through the sale of FX to the BDC operators”.
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