The naira, the national currency of Nigeria, decreased at the Investors and Exporters foreign exchange (FX) window at the beginning of the year, according to market figures.
The decline occurred in response to a revelation from the Central Bank of Nigeria (CBN) that the position of foreign reserves decreased by $3.45 billion in 2022 as a result of an increase in import bill payments.
Since early February 2022, when they printed at $40.01 billion, Nigeria’s total foreign reserves, which printed at $37 billion on Friday, have been heading below that amount.
The naira lost around 11% of its value in 2022, despite academics’ claims that the apex bank’s intervention temperature fell at the same time as foreign investors stopped supporting the local economy.
The CBN maintains severe foreign currency limitations to safeguard the stability of the naira on the foreign exchange market while some multinational firms struggle to upstream cash abroad, adding to the FX backlog.
In order to advise their customers of the decision to suspend the $20 minimum spend threshold for debit card transactions and to inform them that it would take 60 days to process FX for payments of abroad school tuition, Nigerian banks wrote letters to their consumers.
The need for foreign currency is predicted to rise in the first quarter of 2023 as a result of the projected increase in demand and opening of import channels, including election expenditures.
On the foreign currency market for investors and exporters, the Naira decreased by N0.17, or 0.04%, from N461.50 the previous week to end at N461.67.
The gross reserve position of Nigeria’s foreign exchange reserves increased by $70.13 million as it concluded the day at $37.15 billion. >>> Bond prices in Nigeria don’t change when Treasury Bill rates fall under 4%.
The total turnover in the investors’ window fell by 43.5% to $290.93 million on Thursday at the close, reflecting activity levels, with deals completed in the range of N425.00 to N477.67.
The Naira dropped 0.68% or N5 week over week to reach N742 from N737 last week as the exchange rate deteriorated at the window of the parallel market. Forex market players reportedly kept their bids at between N465 and N470 in the Investors and Exporters section, according to currency dealers.
In the Forwards market, the naira depreciated 0.5% at the 1-month to N470.35 and 1-year rate drop 0.2% to N530.67 per contracts while 3-month contract appreciated 0.1% to N479.54. Meanwhile, the naira was flat at N497.58 for 6-month contract.