Nigeria’s foreign exchange crisis has gotten so bad that even the monetary authority’s currency injections have not been able to reverse the value of the naira.

It was a fight for survival in the foreign exchange market where sustained demand for imports forced the Nigerian naira to descend for a kiss with the dragon, which caused the local currency to bleed.

The naira rate plunged further at the official market, closing at N1485.99 per US dollar due to weak supply side.

FX demand remained elevated across currency markets, causing exchange rates to weaken while the country grapple with US dollar challenge.

In the Nigerian autonomous foreign exchange market, the naira depreciated against the US dollar, trading at N1485.99 per dollar. This happened despite forex market intervention sales conducted by the Central Bank of Nigeria (CBN).

The apex bank resumed foreign currency sales to local deposit money banks as part of an effort to halt the naira from free falling. Unfortunately, the market swallowed FX injections without having positive impacts on an already empty FX market belly.

Data from the Central Bank of Nigeria’s (CBN) foreign reserves ended the week at $32.69 billion, falling by about -0.12% from the previous week’s close of $32.73 billion.

The monetary authority has allowed the naira to trade more freely on a willing-buyer, willing-seller basis since June 2023 and has leaned towards inflation targeting instead of controlling the money supply.

The exchange rate depreciated at the parallel market, trading close at N1430 after the apex bank halted subsidised FX sales to Bureaux de Change.

In its latest circular, the CBN is asking currency traders in the informal FX market to re-register.

This suggests the apex bank has terminally stopped its $10,000 FX sales to BDCs. This explains why the local currency has seen market wide depreciation.

In April, the naira rose to unprecedented heights following the recent FX interventions of the CBN, specifically through the sale of FX to the BDC operators.

The share capital of BDC operators was increased to N2 billion and N500 million for Tier 1 and Tier 2 licenses, respectively.

The CBN also revoke more than 4100 BDCs certificates for various regulatory breaches.