The Nigerian Naira closed the month of April in a steep decline, closing at N1,390.96/$1 within the NAFEM, the place the exchange rate trades officially.
This rate represents a 5.8% depreciation from the month’s opening rate of N1,309.39 and a big drop from its mid-month excessive of N1,072.74.
The naira rallied against the dollar within the first half of April as a slew of central bank coverage actions appear to have stifled speculation.
However issues turned worse after the IMF Spring meetings, falling each day for the reason that apex bank addressed issues over the external reserves.
In the meantime, this additionally signifies the 8th consecutive depreciation for the reason that Naira last appreciated to as excessive as N1,072/$1, following initial enthusiasm over the central bank’s foreign exchange policies.
On the parallel market, the unofficial charges quoted have been barely stronger, with Nairametrics gathering information showing a range of N1,350 to N1,380/$1.
Market Highlights
Based on data from FMDQ, the exchange charge gained marginally on Tuesday April 30th, closing at N1,390.96/$1 in comparison with N1,419/$1 a day earlier.
The intra-day buying and selling witnessed highs of N1,450 and lows of N1,200, showcasing extreme volatility.
Forex turnover at this time was significantly decrease at $225.36 million, a sharp fall from the $309 million recorded last Friday.
For the month of April, total forex turnover within the official market was reported at $3.94 billion, a significant decrease from the $5 billion recorded in March.
This implies that the official market has seen a substantial reduction in forex activity.
The exterior reserves, nevertheless, have continued their slow upward trend, now standing at $32.13 billion, marginally higher than the $32.109 billion reported last week.
Analyzing the Depreciation
The current plummet within the alternate charge may be attributed to a mix of rising demand for {dollars}, a strengthening U.S. dollar, and increasing inflation rates.
Furthermore, the noticeable decrease in forex turnover has additionally performed a big function within the currency’s decline.
Central Bank Governor, Yemi Cardoso, stated that the volatility in exchange rates is expected to proceed due to market forces suggesting that there might be “ups and downs” with rates.
This unstable forex landscape poses important challenges for Nigeria’s economic stability, impacting both imports and inflation rates.
Source:- Nairametrics
