According to data from the Central Bank of Nigeria, the external reserves, which stood at $34.12 billion at the end of June 2023, declined to $33.95 billion as of July 28, 2023.
Over the past two weeks, the naira's value at the parallel market dropped significantly from 820/$ to 868/$ on Monday. Meanwhile, at the Investors' and Exporters' (I&E) window on the FMDQ, the naira's trading commenced at 784.91/$, reached a high of 830/$, and eventually closed at 756/$.
A Bureau de Change Operator in Lagos, Mr. Abudul Ahmed, reported that they bought and sold the dollar at rates between 860/$ and 868/$ on Monday.
Addressing the media on the forex pressure, Aminu Gwadabe, the President of the Association of Bureau De Change Operators of Nigeria, expressed concerns over the declining confidence in the local currency.
He pointed out that this lack of confidence has led to an increase in foreign exchange holding positions, hoarding, and speculative activities in the market.
He stressed that , the situation indicates growing pessimism among investors regarding the naira's stability and reflects the challenges faced by the Nigerian economy in managing its foreign exchange reserves amidst fluctuations in the currency market.
“The core objectives of the harmonization of the multiple exchange rate is to discourage arbitrage and rent seeking, however, the recent trajectory does not seem to achieve that.”
He added that, “The increasing demand of oil marketers, investors backlog, school fees and travellers have continue to mount demand pressure on the limited dollar availability in the market.”
To immediately address the looming situation of the local currency, he said, “We need to ensure additional foreign finance either bilaterally or multilaterally to enhance liquidity.”
At the last Monetary Policy Committee meeting in Abuja, The acting Governor, Central Bank of Nigeria, Folashodun Shonubi, said the bank would address the demand pressure on the country’s exchange rate, as the naira continued to slide against the dollar.
The accretion to external reserves remained weak while foreign exchange demand pressures persisted, he said.