The Central Bank of Nigeria (CBN) has attempted numerous times to defend the Naira, but the currency has dropped by ₦29 in the second quarter of 2022.
This represents Nigeria’s second-worst quarter depreciation, with the worst quarter occurring in Q3 2021 when the Naira fell by ₦44.
The official Investors and Exporters (I&E) market Naira-US dollar exchange rate has remained largely stable around the ₦420/$1 region. The Naira, on the other hand, is heading toward ₦650/$1 on the black market, continuing its downward trend.
To protect the Naira, the Central Bank has enacted a slew of regulations, ranging from prohibiting the sale of dollars to BDCs to the RT200 scheme, which provides an ₦65 rebate on export revenues.
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Nonetheless, the CBN intervention comes at a cost in terms of Nigerian foreign reserves, which, despite high oil prices, have not been growing at the expected rate.
Year to date, the reserve has decreased by $1.37 billion, falling from $40.52 billion in December 2021 to $39.16 billion in June 2022. The external reserve increased by $671.63 million in June, following a $1.1 billion decrease the previous month.
Despite the CBN’s interventions, the drop in forex supply contributed to the official market’s decline in the value of the local currency.
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Nigerian banks sent out messages in February 2022 informing customers of reduced dollar limits on debit cards. Furthermore, IATA published information in May 2022 indicating that Nigeria owed airline operators a backlog of over $450 million.
The total amount of foreign currency exchanged in the Investors and Exporters window on July 4th was $47.56 million, a decrease from the previous trading session’s total of $78.86 million.
The black market exchange rate closed on July 10, 2022, at ₦616/$1, a ₦51 depreciation from the ₦565/$1 on December 31, 2021.
The black market rate was ₦587/$1 on March 31, 2022, indicating a ₦29 decline in q2 2022. In comparison to the beginning of the year, the official exchange rate has consolidated around the ₦425/$ region.
