Naira value sinks deeper against the dollar, despite CBN withdrawals from external reserves

The value of the Nigerian Naira weakened further on Wednesday, making two straight days of losses and a complete reversal of gains recorded early in the week at the official foreign exchange (FX) market.

Data from FMDQ securities where Naira is officially traded shows Naira value dropped to N419.33 a dollar compared to the closing rate of N418.50/$ on Wednesday.

Naira’s weak trading happened as forex supply shrunk to a low of $82.56 million as participants were forced to scramble for available dollars.

It was a different story for Naira against the British Pounds and Euro as it again appreciated.

However, CBN data shows that Naira continues to stay strong against the British pound as it extended its appreciation for three days.

Nigeria’s currency ended at N522.53/£1 on Thursday, up from N527/£1 on Wednesday, and it also rose against the Euro, closing at N439.3/€1 on Tuesday, up from N443.5/€1.

Meanwhile, the Central Bank of Nigeria (CBN) has recorded its first withdrawal from Nigeria’s external reserves for the month of March 2022.

For the first 21 days of March, the external reserve was on a consistent increase adding over $273.7 million.

However, this changed since Friday, 22 April, when CBN took a stance against IMF and World Bank that it would continue its intervention in Nigeria’s forex market.

Read also: Again, Naira appreciates against the U.S dollar, as CBN increases forex supply

The two global institutions had warned CBN to desist from its current policy of managing Nigeria’s exchange rate and allow market forces to determine the value of the Naira as it was adding too much pressure on the economy.

Godwin Emefiele, in his reply, insisted on a homegrown solution to managing Nigeria’s exchange rate and continuing with its intervention in the forex market despite IMF and World bank saying it was putting pressure on the Naira.

Since the response on Friday last week, a total of $134 million has been removed from the reserves, and it now stands at $39.67 billion compared to $39.81bn before the CBN response.

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