CEM REPORT | Despite effort of the Central Bank of Nigeria (CBN) to defend the Naira, the currency has further fallen by N29 in the second quarter (Q2) of 2022.
The country last recorded such depreciation in Q3 2021 when the Naira fell by N44.
Although, at the official Investors and Exporters (I&E) market the Naira-US dollar exchange rate has remained stable around the N420/$1 region.
However, on the black market, the currency has continued a dive towards N650/$1.
As at the 4th of July, the total amount of FX exchanged in the Investors and Exporters window was $47.56 million, a decrease from the previous trading session’s total of $78.86 million.
Forex turnover has averaged $67.67 million over the last three trading sessions, a significant decrease from the preceding three trading sessions’ average of $157.48 million.
As at 31st of March 2022, the black market rate was N587/$1, indicating a N29 decline in Q2 2022, also the Naira fell by N22 in the first quarter of 2022
While, the official exchange rate consolidated around the N425/$ region compared to N416/$1 at the beginning of the year.
Meanwhile, as at 10th of July, 2022, the black market exchange rate closed at N616/$1, indicating a N51 depreciation when compared to the N565/$1 on the 31st of December 2021.
The currency regulator has introduced a portfolio of regulations from restrictions on certain sector access to foreign exchange to barring the sale of dollars to BDCs.
Also, the RT200 scheme, which is designed to provide a N65 rebate on export revenues, to the dollar for naira initiative amongst others, are all in a bit to defend the naira.
However, this policies bore a backlash on the country’s foreign reserves, which have not been growing at the expected rate despite high oil prices.
Although, this can still be blamed on other factors like oil theft and Russia-Ukraine crisis, however, on a year-to-date basis, the reserve has lost $1.37 billion from $40.52 billion in December 2021 to $39.16 billion in June 2022.
In the month of June, the external reserve gained $671.63 million, on the back of $1.1 billion decline in the previous month.
The World Bank had earlier warned that the CBN multiple exchange rates, trade restrictions, and the financing of the public deficit, is damping the country’s business environment.
Meanwhile, the CBN has said that Nigerians’ import dependency is the cause of the falling Naira.
The apex Bank has since encouraged Nigerians to patronize locally made products to boost Nigeria’s economy and stop the Naira from depreciating further in the parallel market.
