On Monday, July 29th, 2024, the value of the naira compared to the dollar dropped to the lowest it has been in four months. It reached N1,611 on the official Investor and Exporter window.
This information comes from FMDQ, the place where official currency trading happens.
The naira lost value at the start of the week, reversing the gains it made by the end of the previous week, as the central bank sold foreign currency to traders.
What the numbers are showing
According to the FMDQ, the naira was at N1,611.40 on Monday, July 29th, 2024. On Friday, it was at N1,609.
- During the day, the highest rate was N1,622/$1 and the lowest was N1,500/$1, showing a big difference in rates on the official market.
- The market saw a turnover of $179.34 million, compared to $168.3 million on Friday. So far in July, the turnover has reached about $3.7 billion, compared to $3.3 billion in all of June 2024.
- In the unofficial market, rates were between N1,590 and N1,600, which is slightly lower than the official rate.
- The exchange rate has fallen by 7% in July, the biggest monthly drop since February when it fell by 9%.
- January was the worst month this year with a 60% drop.
- This year, the naira has lost 77.6% of its value compared to the United States dollar due to policies aimed at stabilizing the exchange rate.
Nigeria’s external reserves were around $36.5 billion as of July 26th, 2024.
Why the naira is losing value
Experts at Newslodge noticed that the naira started losing value in late June, crossing N1,500/$1 for the first time since May.
- The rates continued to fall into early July and dropped rapidly as we reached the middle of the month.
- By July 10th, the rate was N1,560 and kept declining since then.
- The drop is due to increased demand from importers who need to buy inventory, equipment, and raw materials.
Newslodge also noted that demand pressure is coming from both the retail and investor sides of the market.
What you need to know
Last week, Newslodge reported that the exchange rate dropped to a four-month low of N1,603, which led the central bank to sell around $148 million to traders.
- This was the third sale to authorized currency dealers this month as the central bank tries to increase the supply of foreign currency in the market.
- Two weeks ago, the central bank also sold $106.5 million to 29 dealer banks.
- The federal government has announced plans to issue $500 million in domestic foreign currency-denominated bonds in three to four weeks.
- Wale Edun, the Minister of Finance, mentioned this during a press briefing in Abuja, which was themed ‘Economic Recovery and Growth: Progress and Prospects 2024’.