Naira Weakens Further, Closes at N931.23/$1 in Official Market

On January 17th, 2024, the Nigerian naira continued its decline against the U.S. dollar, both in the official and parallel markets.

At the official market, based on data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency depreciated by 6%, closing at N931.23 to a dollar at the close of business. This indicates a significant N52.72 loss or a 6% decrease compared to the previous day’s closing rate of N878.57.

The naira also depreciated in the parallel forex market, where forex is traded unofficially, with the exchange rate quoted at N1320/$1. This represents a 3.03% decrease from the previous day’s closing rate. Peer-to-peer traders quoted around N1331.80/$1.

Key Points:

• The Central Bank of Nigeria (CBN) announced collaboration with relevant agencies to impose sanctions after an independent forensic review uncovered severe infractions, widespread abuse, and substantial non-compliance with market regulations in foreign exchange transactions.
• The Acting Director of the Corporate Communications Department at the CBN, Mrs. Hakama Sidi Ali, emphasized the CBN’s commitment to cleansing the financial services sector, instilling trust, and building confidence in the Nigerian economy.
• The forensic review, conducted by a reputable firm, served as the basis for these decisions. The CBN disclosed that payment of the forex backlog for qualified transactions had commenced.
• The review revealed grave infractions, gross abuse, and significant non-compliance with market regulations, prompting the CBN to enforce appropriate sanctions in collaboration with relevant agencies.
• The CBN injected approximately $2 billion into various sectors, including manufacturing, aviation, and petroleum. It successfully cleared the entire liability of 14 banks, marking a significant milestone in resolving the forex backlog, and initiated settlements with foreign airlines.

Despite the challenges, the CBN affirmed its commitment to settling legitimate foreign exchange backlogs, continuing the efforts made over the last three months.