Nigeria’s foreign reserves experienced a decline of $915 million following the Central Bank of Nigeria’s official decision to float the naira and open up the foreign exchange market. Data from the CBN, obtained on Sunday, revealed that the reserves, which had reached $34.66 billion on June 14, 2023, when the naira’s floatation began, decreased to $33.74 billion by August 24, 2023.
Just before the naira float was announced by the CBN, the naira-to-dollar exchange rate at the Investor & Exporter forex window was 471.67/$ on June 13. Subsequently, the naira’s value plummeted to more than 700/$ at the I&E window.
Since that time, the naira has consistently traded above 700 per dollar. In the parallel market, the naira was being bought and sold at rates of 900/$ and 915/$ on Saturday. Bureau de Change operators, who communicated with The PUNCH, reported that the Pound Sterling was being bought and sold for N1160 and N1180.
In the I&E window, trading commenced on Friday at 773.29/$, reaching a peak of 799.9/$ before concluding at 778.42/$.
During the most recent Monetary Policy Committee meeting, the acting Governor of the CBN, Mr. Folashodun Shonubi, acknowledged the weak increase in external reserves and the persistent pressure on foreign exchange demand. He asserted that the central bank would take measures to prevent further depreciation of the naira and expressed determination to crackdown on illicit Bureau de Change activities.
This series of developments coincided with the Nigerian National Petroleum Corporation’s announcement that it would secure a $3 billion loan from the Africa Import and Export Bank to temporarily enhance dollar supply in the country.
Aminu Gwadabe, the President of the Association of Bureau De Change Operators of Nigeria, highlighted that the CBN intended to intensify actions against unlawful operators in order to stabilize the naira. He noted that during a discussion between the CBN and their compliance officers, the central bank had reiterated its plan to revoke the operating license of any operator in breach of the allowable margin of -2.5% and +2.5% on the average weighted rate of I&E closing rate by August 31, 2023, along with penalties.