By Adedapo Adesanya
The Naira suffered a loss against the United States Dollar in the foreign exchange (forex) market on Monday amid a shortage in FX supply as seasonal demand grows.
Yesterday, the value of the local currency depreciated against the greenback by 4.4 per cent or N70.65 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,670.65/$1 compared with last Friday’s rate of N1,600.00/$1.
The domestic currency has seen volatile levels this year as the Central Bank of Nigeria (CBN) has not constantly sold FX to authorised dealers. In the last two months, the apex bank has erratically supplied FX sales to the market and this lack of injection, coupled with high seasonal demand, is putting pressure on the market.
To tackle the challenges associated with the FX risks, the CBN and the International Finance Corporation (IFC) signed an agreement on Monday to facilitate local-currency financing, hoping to boost demand for Naira while helping firms to avoid the exchange-rate risk of borrowing in foreign currencies.
The value of forex transactions during the trading day stood at $81.17 million, 71.5 per cent or $203.76 million lower than the $284.93 million recorded in the last trading session.
However, the Nigerian currency gained against the Pound Sterling in the official market on Monday by N4.58 to sell at N2,127.71/£1 compared with the preceding session’s N2,132.29/£1 and against the Euro, it improved its value by N5.95 to finish at N1,774.13/€1 versus N1,768.18/€1.
A look at the black market showed that the Naira weakened further on the first trading day of the week by N10 to quote at N1,740/$1, in contrast to the previous session’s N1,730/$1.
Meanwhile, Bitcoin (BTC) briefly touched the $70,000 mark for the first time since June on Monday, but it later settled at $69,847.70 after just chalking up 2.6 per cent.
The boost came on the back of a fresh rate-cutting cycle from the major Western central banks, combined with sizable monetary and fiscal stimulus from China, which may or may not have been the key catalysts for this latest bull move.
Also possibly at play are renewed large inflows into US-based spot bitcoin exchange-traded funds (ETFs) and the surge in prediction markets for crypto-friendly GOP candidate Donald Trump’s presidential election chances.
Dogecoin (DOGE) soared by 10.8 per cent to $0.1576, Ethereum (ETH) jumped by 2.1 per cent to $2,565.29, Binance Coin (BNB) went up by 2.0 per cent to $601.20, Cardano (ADA) appreciated by 1.3 per cent to $0.3452, Solana (SOL) jumped by 0.8 per cent to $178.87, Ripple (XRP) grew by 0.6 per cent to $0.5193, Litecoin (LTC) increased by 0.02 per cent to $70.03, and the US Dollar Tether (USDT) gained 0.06 per cent to finish at $1.00, and the US Dollar Coin (USDC) traded flat at $1.00.