The official exchange rate between the naira and dollar fell by 2.04% to N1615.94 per US dollar on Tuesday, February 27th, 2024, this is according to data published on the FMDQ where forex is sold officially.
However, the dollar crashed against the naira in the early hours of Wednesday, February 28, 2024, gaining as much as 13.4%.
The local currency weakened despite the media briefing by the CBN Governor, Olayemi Cardoso, wherein he outlined efforts by the central bank to address the country’s forex crisis.
The governor of the apex bank announced that the monetary policy committee increased the monetary policy rate to 22.75% from 18.75%, a move aimed at slowing down the pace of inflation.
He also explained the several policy measures of the apex bank aimed at addressing the forex crisis.
NAFEX rate weaker than BDC Rates
Meanwhile, the closing rate of N1,615.94/$1 is at a 19% discount to the N1,301/$1 reportedly sold to BDC operators.
- Nairametrics earlier reported that the Central Bank of Nigeria (CBN) had taken a decisive step to bridge the widening gap in the exchange rate by selling $20,000 to each eligible Bureau De Change (BDC) operator across the country.
- This allocation will be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as of the previous trading day, dated February 27, 2024.
- This strategy is anticipated to inject much-needed liquidity into the market and stabilise the Naira’s value.
- Also, the circular outlines specific guidelines for the BDC operators, stipulating that all BDCs are permitted to sell foreign exchange to end-users at a margin not exceeding one percent (1%) above their purchase rate from the CBN.
This measure is intended to prevent excessive mark-ups and protect consumers from price exploitation.
FX Rates across markets
The naira declined marginally as forex traders recorded a daily turnover of $154.16 million. The market also recorded an intra-day high of N1778/$1 and an intra-day low of N1300/$1.
- Meanwhile, on the parallel market where the exchange rate is sold unofficially, the exchange rate was quoted at N1,630/$1, reflecting a 1.23% gain from the N1,650 rate it closed on the previous day.
- Additionally, the Naira gained against the Euro by 8.82%, closing at N170/0EUR1 compared to N1850/EUR1 reported the previous day.
- The Great British Pound (GBP) closed at £1/N2000, an increase from £1/N2,100 recorded the previous day, this marks a notable growth of 5% compared to the rate recorded the previous day.
- On Cryptocurrency exchanges where forex is sold at a P2P basis, the exchange rate sold for an average of N1,434. During 24 hours the exchange rate oscillated between N1606 and N1415 to the dollar.
Cardoso on P2P trades
During the MPC meeting, Yemi Cardoso highlighted the activities of cryptocurrency traders as a major issue for the apex bank.
- He decried the activities of P2P traders claiming that some of them represent illicit flows and also stating that a total of $26 billion passed through Binance Nigeria.
- According to him “they are concerned that certain practices go on that indicate illicit flows going through a number these entities and suspicious flows at best. In the case of Binance, in the last one year alone, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify”
