Recent Bloomberg findings have shown that Nigeria is depleting its foreign exchange reserves at a rate not witnessed in the last four years. This has sparked worries that the central bank is reducing the amount of dollars it owns to maintain the naira....CONTINUE READING
This follows news that the currency of the largest oil producer in Africa has recovered most of its losses following a 43% devaluation in January.
The event transpired after the Central Bank of Nigeria implemented policies to enhance liquidity, luring capital inflows, and empowering the market to set the value of the naira.
The CBN promised to release a backlog of unfulfilled dollar demand as part of the reforms.
According to a Bloomberg report, analysts responded by speculating that the CBN might be clearing backlogs with its FX reserves.
Charles Robertson, the London-based head of macro strategy at FIM Partners, said:
“The CBN does appear to be using its FX reserves to clear the valid backlog and return the naira to a realistic exchange rate. My assumption is they hope to encourage others – local and foreign investors – to start investing in the local currency, and return private sector liquidity to the foreign exchange market.”
Nigerians are reacting
On social media X, Nigerians have expressed their thought about the development, as some predict the naira will eventually fall again to a worse state.
@EmekaGift100 said:
“People should hold onto their dollar, Naira will sink to the worst state in the history.
“Bloomberg has just raised alarm that Nigeria is burning its foreign reserve to subsidies dollar Bloomberg has just raised serious concern that Nigeria is burning through foreign-exchange reserves at a rate not seen in four years, raising concerns that the central bank is depleting its dollar holdings to support the naira after pledging it would allow the currency to float more freely.”
@olumidecapital said:
“The naira has gained almost 40% against the dollar since mid-March. While Food inflation is stationed at 40% despite the fact that the country is not fighting with anyone.”
@A__danhajia said:
“It was also garthered that the price of rice is crashing as the #Naira gain values while #Dollar crash.”
@AishaYesufu said:
“People that bought dollar for speculation have excess money for that and frankly they have their dollars and I will say to them keep your dollars closer.
“The main victims of this disastrous Cardoso experiment are businesses who will now be dealing with losses. Any business can whether bad situation but you see uncertainty?! It kills businesses! That is what these disasters are doing.”
“Keep your dollars closer! Your one thousand dollars will buy one thousand dollars worth of things whether Naira decides to go either way. And no matter the disastrous policy Tinubu’s illegitimate government decides to embark on you still have your one thousand dollars to use!”
@ShehuSani said:
“What goes up must come down; Dollar obeyed the laws of gravity while food prices are still hanging high up.”
@abbkar_ai said:
“Dollar is dropping, but stuffs are still cost. Issues dey for our country.”
Naira stages remarkable recovery
Legit reported that on Friday, April 12, 2024, the naira witnessed a significant surge in value on the official market, reaching a trading rate of N1,142.38 against the dollar.
Information obtained from the FMDQ Exchange’s official trading platform, which supervises the Nigerian Autonomous Foreign Exchange Market, indicates that the naira experienced an increase of N88.23.
This uptick reflects a 7.16% rise compared to the preceding trading session on Monday, April 8, when it was valued at N1,230.61 per dollar prior to the Sallah holiday.
