The naira has depreciated to a two-month low to trade at N1,545 per dollar at the parrel market segment of the Nigerian Foreign Exchange Market.
Trade figures from the Bureau de Change Operators in Lagos and Abuja showed that the currency fell 0.65 per cent or N10 from N1,535 traded on Monday to N1,545.
This is the weakest exchange rate the currency has experienced since May 14, 2024, when the naira fell to N1,550 per dollar.
The fall defies the growing foreign exchange reserves which the Central Bank of Nigeria measured at $34.77bn as of July 5, 2024.
The value of the gross FX reserves has grown by $2.2bn from $32.55bn on May 14, 2024 but the gains have not been reflected in the struggling naira.
Nigeria is battling inflation that is 33.75 per cent following economic reforms leading to partial removal of petrol subsidies and managed float of the naira.
Since the introduction of the ‘Willing buyer, willing seller’ FX model last year, the currency has depreciated by more than 100 per cent.
The CBN had in February reintroduced weekly sales of $20,000 to BDCs to moderate prices. However, the bank abandoned the intervention over failure to meet expectations.
The Central Bank Governor, Olayemi Cardoso in April argued that the reserves are not used to defend the naira after the currency gained marginally.
“The shift in our reserves has really little or nothing to do with defending the naira and that is certainly not our objective,” he said.
Bala Bello, a member of the CBN Monetary Policy Committee had said in his statement at the 295th meeting that, “The pressure on the naira reflects supply and demand imbalances in the foreign exchange (FX) market.”
Naira Falls To Two-Month Low Of N1,545 Despite Rise In Forex Reserves is first published on The Whistler Newspaper