By Mario
The naira recorded its worst performance in six months at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, September 4, 2024, where it exchanged for N1,625.88 to the dollar.
This marks the lowest exchange rate since March 8, 2024, when NAFEM recorded a performance of N1,627.4/$1, despite an improved FX turnover of $205.76 million – one of the highest since August 12, 2024, when dollar supply hit $246.44 million.
Data from the FMDQ website on the NAFEM window showed that naira’s depreciation on August 4 represents a 0.89% decline from the previous day’s rate of N1,611.34/$1.
Intra-day activity showed that the naira traded at a high of N1,640/$1 and a low of N1,400/$1, indicating significant volatility in the foreign exchange market before settling on the equilibrium of N1,625.88.
The $205.76 million FX turnover for the day was a marginal drop of 1.84% compared to the previous day’s $209.61 million – the highest since August 12, 2024.
The drop in exchange rates indicates an uncertain trend as the Nigerian government announced a 45% increase in the pump price of petrol on September 3, 2024.
This is believed to spark a high inflation rate which would herald a wave of renewed hardship for the citizens, households and businesses.
Nigeria’s headline inflation rate fell in July for the first time in well over two years – dipping to 33.40% in annual terms from 34.19% recorded in June.
Food inflation rate in July 2024 was 39.53% points higher compared to the 12.55% rate recorded in July 2023
This crash occurred amid a reported hike in petrol prices across the country, which may add to the plights of businesses and ordinary Nigerians, further worsening inflation.
The Nigerian official foreign exchange (FX) market experienced a marked decline in turnover in August, despite the initial Retail Dutch Auction conducted by the Central Bank of Nigeria (CBN).
The troubled naira is a reflection of the drop in the nation’s foreign exchange reserves, which fell to $36.32 billion as of August 29, 2024, marking a decline from the year’s peak of $36.70 billion recorded on July 29, 2024.
The CBN has intensified efforts towards achieving a stable rate of the domestic currency which industry experts believe is not sustainable given the import-dependent nature and the poor productive base of the economy.