The exchange rate for the naira dropped to a record low of N462.50 at the window for investors and exporters due to the persistent shortage of US dollars in the regional economy. The naira had dropped to N464 over the weekend, recovered, then fell.
Nigeria’s exchange rate has been fluctuating left and right, according to currency brokers, based on the amount of foreign currency demand that the supply can support.
Since businesses increasingly rely on imports to increase production, demand for the US dollar is rising. Nigerian exporters are active at the Central Bank window, but foreign exchange proceeds have not yet caught up to import bills.
The local currency’s value has fallen as a result of the imbalance between FX supply and demand. Despite the involvement of the top bank in 2022, the naira fell by nearly 11%. Naira fell 11% when banks released a fresh update on foreign exchange spending.
The Nigerian naira recovered Tuesday’s value thanks to a persistent market intervention, as the foreign exchange market keeps the competing forces of supply and demand in check.
As a result of expectations that the local currency will depreciate in 2023, exchange rates at the investors’ and exporters’ foreign exchange market increased by N1, recovering the same amount that was lost the day before.
Central Bank of Nigeria conducted a foreign exchange auction last week, and banks that are active players now have significant US dollars in the vaults for onward sales to Nigerians.