Naira falls to N1089/$ on official I&E window

On Tuesday, the naira dropped to N1089.51/$ on the official Investor and Exporter window.

According to data from the FMDQ Securities Exchange, the currency decreased by 27.19 percent from the N856.57/$ it closed on Monday.

The naira saw trading on Tuesday at N922.22/$, peaking at N1251/$ and plunging to N720/$ before closing at N1089.51/$.

Forex turnover for the day came to $97.45 million.
On the official window, the naira will close below N1,000 for the fourth time this year.

The naira reached its lowest point of N1,099.05/$ on December 8, 2023; on December 28, 2023, it ended trading at N1043.09/$; and on January 3, 2024, it closed at N1035.12/$.

The naira closed at N1089.51/$ on Tuesday, the second-lowest level since the Central Bank of Nigeria lifted the currency's rate cap. This was achieved through the official foreign exchange window.

The apex bank is working to pay off maturing foreign exchange obligations that are owed to the Deposit Money Banks, but the naira is still depreciating. As part of its backlog obligations, the CBN recently declared that it had paid $2 billion.
According to reports, the bank's forward contract obligations total $7 billion. This was revealed by the CBN when it revealed that it had paid out $61.64 million to foreign airlines from matured foreign exchange that was owed to them.

"These payments signify the CBN's ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country's exchange rate," stated Hakama Alia, the acting director of corporate communications for the CBN.

"It is expected that this move by the CBN should further boost investor confidence in the Nigerian economy and give the Naira a significant boost against other major world currencies."
Additionally, the government's renewed efforts to increase foreign exchange market liquidity are being met with resistance from the naira's current depreciation against the dollar.

The African Import-Export Bank provided the Federal Government with a $2.25 billion foreign exchange support facility, as revealed by Wale Edun, the Coordinating Minister of Economy and Minister of Finance, at the end of 2023.

The minister claims that the first tranche of the bank's $3.3 billion facility is intended to address the economy's FX shortages.
Dr. Ayo Teriba, the Chief Executive Officer of Economic Associates, addressed the matter and stated that insufficient foreign exchange supply is the reason for the naira's volatility.

He declared, "The CBN is known to be behind on some of its obligations, and its reserves are low and decreasing. It has promised to pay off all of its debt in due course and has begun to pay off its arrears.

He said that although the government has been working on it, the investments intended to increase the supply of foreign exchange have not yet materialised.
He said, "I am hopeful that the naira will stabilise and the forex will increase reserves and meet demand in the FX market if the government can implement their plan to open to investors. The N1000/$ should, in my opinion, reflect the FX shortages. It is my hope that Nigeria will make the correct decisions in the coming weeks.

Last year, we intended to introduce the NNPC to the market, but that didn't work out. We can move quickly on these. Nigeria has choices.

Teriba made clear that the recent $2.3 billion inflow in the form of crude forwards would not address the nation's supply problems.
"We need to put down enough access to attract foreign exchange inflows," he continued. The value of the naira will stabilise, inflation will decline, economic growth will accelerate, and living standards will rise. This will become a bottomless pit if we do nothing and the volatility keeps on. For the FX market to get better, we must erect a wall of reserves.