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Naira Weakens on Cash Crunch, Higher Demand for Dollars

The Naira depreciated against the Dollar at the different segments of the foreign exchange (FX) market on Thursday, February 2.

The forex market came under pressure as customers continue to scamper for both local and foreign currencies following moves by the Central Bank of Nigeria (CBN) to mop up cash in the country, turning the tempo on the local currency.

This led to losses in the value of the domestic currency against the US Dollar at the Peer-to-Peer (P2P), parallel market, and the Investors and Exporters (I&E) windows of the forex market.

In the P2P market, the local currency fell by N2 against the greenback to sell at N762/$1 compared to the preceding day’s value of N760/$1.

In the black market, the Nigerian currency also depreciated against the American Dollar yesterday by N2 to trade at N752/$1, in contrast to the midweek’s rate of N750/$1.

At the official FX window, the Naira fell against the greenback by 50 Kobo or 0.11 per cent to quote at N462.00/$1 compared with the previous session’s N461.50/$1, as the demand for Dollars increased, putting pressure on the local currency.

Data from the FMDQ Securities Exchange showed that the value of forex transactions recorded yesterday stood at $119.35 million, in contrast to the preceding session’s $105.37 million, representing an increase of 13.3 per cent or $13.98 million.

However, in the interbank segment, the Naira appreciated against the British Pound Sterling by 10 Kobo to trade at N568.32/£1 versus N568.42/£1, and against the Euro, it depreciated by N4.79 to close at N507.14/€1 compared with the previous session’s N502.35/€1.

Meanwhile, the cryptocurrency market treaded downward on Thursday as markets continued to react to the latest US Federal Reserve policy decision. On Wednesday, the US central bank moved to increase rates by 25 basis points while signalling that further hikes could be on the cards.

Bitcoin (BTC) slid 1.7 per cent to sell at $23,532.94, Ethereum (ETH) dropped 2.1 per cent to settle at $1,640.69, Solana (SOL) shed 4.5 per cent to quote at $24.26, Dogecoin (DOGE) depreciated by 3.4 per cent to $0.0913, and Litecoin (LTC) went down by 1.5 per cent to $98.79.

Further, Cardano (ADA) lost 2.4 per cent to trade at $0.3987, Binance Coin (BNB) recorded a 1.6 per cent slide to sell at $320.95, and Ripple (XRP) declined by 1.1 per cent to finish at $0.41, while the United States Tether (USDT) and Binance USD (BUSD) remained unchanged at $1.00 each.



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