No more N1k/$: Naira reverses New Year losses, rises by 13.51% to gain N189.8 against the Dollar

After beginning the new year on a poor note, the naira made a dramatic turnaround in the official market on Thursday, January 4, 2024, rising by 13.51%.

Data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) shows that the naira closed trading at N895.25 from the N1,035 it closed on Wednesday, January 3, 2024.

The development follows an injection of $2.25 billion from the Afrexim Bank into the economy to ease Nigeria’s Forex woes and impact the naira.

According to reports, the facility was meant to ease the forex squeeze that has plagued the market since Nigeria began its reform.

The naira’s gain represents an N139.89 gain or 13.51% compared to the N1,035.12 it closed on the day before.

The naira recorded an intraday high of N1,268 per dollar and an intraday low of N701 per dollar, representing a disparity of N567 per dollar.

Information from NAFEM shows that forex turnover at the end of trading stood at $68.49 million, representing a 20.06% decline from the day before.

The naira depreciates on the black market

The naira depreciated slightly at the unofficial parallel market, trading at N1,230 per dollar, a 0.81% decline compared to the previous day.

The development comes as the naira has been ranked as the worst-performing currency in Africa in 2023, losing 55% of its value.

The worst-performing currency in Africa

Naira’s woes follow a foreign exchange reform embarked upon by the Nigerian government on June 14, 2023, when the Central Bank of Nigeria (CBN) announced the free float of the currency, a Legit.ng report said.

The policy set the Nigerian currency on a free-fall against the US dollar, leading to a massive fall in value.

The local currency closed 2o23 at N906 per dollar, one the lowest in a year that has seen it battered by a lack of forex liquidity, which experts blamed on FX backlogs plaguing the economy.

As of Wednesday, January 3, 2024, the naira depreciated again to its lowest at N1,035.12 per dollar, crashing any hope of rapid recovery.

Since the announcement, the naira has fluctuated in official and parallel markets, where traders jostle for a few US greenbacks.

Economic analysts believe the naira’s problems began when the Nigerian government stopped its forex interventions in the official market.