Naira's further decline leads to a drop of $167.2m in external reserves
In July, the country's external reserves experienced a loss of $167.2m due to the further depreciation of the naira against the dollar.
Data obtained from the Central Bank of Nigeria revealed that the reserves, which stood at $34.12bn on June 30, 2023, declined to $33.95bn as of July 28, 2023.
Within the last two weeks, the naira plummeted from 820/$ to 868/$ in the parallel market on Monday.
Meanwhile, at the I&E window on the FMDQ, the naira began trading at 784.91/$ and reached a peak of 830/$ before concluding at 756/$.
Mr. Abudul Ahmed, a Bureau de Change Operator in Lagos, reported, "Today (Monday), we bought and sold the dollar at 860/$ and 868/$."
Addressing the forex pressure, Aminu Gwadabe, the President of the Association of Bureau De Change Operators of Nigeria, commented, "Optimism is giving way to pessimism as confidence in our local currency remains low. This has resulted in an escalation of Fx holding position, hoarding, and speculation."
"The primary goals of harmonizing the multiple exchange rates are to deter arbitrage and rent-seeking. Unfortunately, the recent trajectory appears to fall short in accomplishing these objectives."
He further explained, "The mounting demand from oil marketers, investors' backlog, school fees, and travelers continues to exert pressure on the limited availability of dollars in the market."
To promptly address the imminent challenges with the local currency, he emphasized the need to secure additional foreign finance through bilateral or multilateral means to bolster liquidity.
During the last Monetary Policy Committee meeting in Abuja, the acting Governor of the Central Bank of Nigeria, Folashodun Shonubi, pledged to tackle the demand pressure on the country's exchange rate as the naira continued to depreciate against the dollar.
Shonubi acknowledged that the accretion to external reserves remained weak while foreign exchange demand pressures persisted.
He stated, "The market needs to find its equilibrium. There is significant pent-up demand that the market cannot currently satisfy. Once we address this demand, the volatility will normalize. We have initiated interventions, and we will continue to intervene until the market stabilizes to the desired level."
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