- The Nigerian naira has depreciated massively against the pound sterling in the month, analysis shows
- The naira, which traded high in April against the pound, lost almost N1,000 in May due to a decline in the FX supply
- Also, the naira suffered losses against the euro, losing about N600 in one month as CBN halted FX sales to BDCs
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
A monthly analysis shows that the Nigerian currency, the naira, has lost ground against the pound sterling in the last month.
Available data reveals that as of April 2024, the Nigerian currency had recovered massively against the pound sterling, trading at an average of N1,200 per pound.
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Naira reverses fortunes against pound
The development improved compared to the March records when the naira traded at an average rate of N1,762 to the pound.
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However, on Monday, April 22, 2024, the naira began to lose ground against the pound sterling as the Nigerian FX market forex supply began to thaw.
Reports indicate that by April 22, 2024, the naira lost almost N400 to the pound due to mounting pressure.
The trend continued in May 2024, when the Nigerian currency depreciated against major world currencies, especially the dollar.
As of May 20, 2024, the naira trades at about N1,910 to the pound sterling, a massive N600 loss every month.
The breakdown also shows that the naira has depreciated significantly against the euro, trading at N1,634.53 to the euro as of May 20, 2024.
Naira falls against euro
Available data suggests that the naira began to fall against the euro in the same period as the pound sterling due to insufficient FX supply in the market.
The Nigerian currency emerged as the world’s best-performing currency in April 2024, when it traded near N1,000 per dollar in NAFEM.
The naira’s fortune reversed a week later to become the world’s worst-performing currency following a decline in forex supplies.
CBN stops weekly FX sales to BDCs
The Central Bank of Nigeria (CBN) halted its weekly FX sales to Bureau de Change (BDC) operators, which has been blamed for the naira’s poor performance.
Analysts believe that the scarcity of forex is to blame for the cessation of dollar sales to the BDC operators, who have lamented that the shortage is affecting the naira’s market performance.
Maurice Ibeh, an FX trader and former banker, told Legit.ng exclusively that the CBN may have liquidity issues, contributing to the decline in turnover at the FX market.
He noted that the apex bank had not supplied market operators with sufficient FX in the past three weeks to reverse the naira’s fortune.
“Currently, FX supply is very tight. Operators are lamenting the liquidity squeeze and how it is affecting the naira.
“We expect to see some reprieve in the coming weeks as the Nigerian government reported an improved increase in reserves and crude oil production. I believe some of the FX from these sources would be channeled into the market,” he said.
The dollar crashes as the naira gains
Legit.ng earlier reported that after several days of losses, the naira recovered against the dollar for the second time in a week.
The Nigerian currency has been battered for more than 14 days after emerging as the World’s best-performing currency in April, following CBN policies.
On Friday, May 17, 2024, the naira broke vital resistance against the US dollar to trade at N1,1497.33 per dollar in the official market as against the N1,533.99 recorded on Thursday, May 16, 2024.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
Source: Legit.ng
