The Nigerian naira saw a modest rise against the United States dollar on Wednesday, climbing to N1,609 compared to the previous day’s rate of N1,615.94.
This uptick, representing a N6 increase or 0.37 percent, follows a series of foreign exchange directives recently issued by the Central Bank of Nigeria.
The Monetary Policy Committee, in a significant move on Tuesday, raised the benchmark interest rate, known as the Monetary Policy Rate (MPR), by 400 basis points to 22.75 percent from the previous 18.75 percent in July 2023. Additionally, adjustments were made to the asymmetric corridor around the MPR, raising the Cash Reserve Ratio to 45.0 percent from 32.5 percent, while retaining the Liquidity Ratio at 30 percent.
Despite these adjustments, the expected impact of the rate hike has yet to manifest fully in the official foreign exchange market. Data from the FMDQ securities exchange revealed that the naira depreciated by 2.04 percent after the dollar was quoted at N1,615.94 on Tuesday compared to N1,582.94 on Monday at the Nigerian Autonomous Foreign Exchange Market.
Government officials have consistently maintained that the naira is currently undervalued.
According to FMDQ data, the naira dropped to N1,615.94 per dollar on Tuesday from N1,582.94 on Monday, representing a 2.0 percent depreciation compared to Monday’s rate.
Spot trading on Wednesday saw the naira ranging between N1,660 and N1,401, with an intraday high of N1,660, a decrease from N1,778/$ on Tuesday and N1,805/$1 on Monday. The intraday low, however, increased marginally to N1,401 from N1,300 on Tuesday and N1,301/$ on Monday.
In addition, the daily FX market turnover declined further to $119.14 million from $154.16 million recorded on Tuesday and $166.58 million on Monday.
At the parallel market, the exchange rate for dollar sales remained volatile, with rates changing multiple times within short intervals, according to currency operators.
Operators attributed this volatility to fluctuating demand dynamics, with fewer buyers and a surplus of sellers contributing to market uncertainty.
Despite the promise by the CBN to sell $20,000 to each Bureau De Change (BDC) at a rate of N1,301/$, BDC operators reported that they had not received their dollar allocations as of Wednesday night. This delay has left over 1300 BDCs waiting for their promised allocation, leading to market uncertainties and further volatility in exchange rates.
