Pressure Mounts on Naira, Falls at Currency Market as Cash Crunch Persists

By Adedapo Adesanya

The Naira depreciated against the Dollar at the different segments of the foreign exchange (FX) market on Wednesday, February 22.

The Nigerian Naira came under pressure as customers continued to battle with the shortage of cash in the financial system following a policy by the Central Bank of Nigeria (CBN) to control the currency in circulation.

On Wednesday, a decision of the Supreme Court to adjourn judgement for the suit challenging the policy provided no leeway ahead of Saturday’s presidential election, which observers have called the most keenly contested since the return to democracy in 1999.

In the Peer-to-Peer (P2P) window of the currency market, the local currency depreciated against the greenback yesterday by N2 to sell at N771/$!, in contrast to Tuesday’s value of N769/$1. Also, in the parallel market segment of the forex market, the domestic currency lost N1 against the American currency to quote at N768/$1 compared with the preceding day’s N767/$1.

In the Investors and Exporters (I&E) window, the Naira fell against the US Dollar by 27 Kobo or 0.06 per cent to trade at N461.60/$1 compared with the previous session’s N461.33/$1.

Data from the FMDQ Securities Exchange showed that the value of forex transactions recorded yesterday stood at $81.95 million, in contrast to the preceding session’s $48.28 million, representing an increase of 69.7 per cent or $33.67 million.

However, in the interbank segment, the Naira closed flat against the Pound Sterling and the Euro at N557.82/£1 and N491.07/€1, respectively.

Meanwhile, the cryptocurrency market treaded upward on Wednesday as markets reacted positively to the release of the latest Federal Open Market Committee (FOMC) minutes.

Bitcoin (BTC) rose 1.2 per cent to sell at $24,411.30, Ethereum (ETH) gained 1.3 per cent to trade at $1,665.09, Binance Coin (BNB) recorded a 1.6 per cent rise to sell at $312.84, Dogecoin (DOGE) appreciated by 1.4 per cent to $0.0859, and Solana (SOL) climbed by 1.3 per cent to sell at $24.40.

Further, Cardano (ADA) added 1.2 per cent to trade at $0.391, Ripple (XRP) also rose by 1.2 per cent to sell at $0.391, and Litecoin (LTC) went up by 1.1 per cent to quote at $95.28, while the United States Tether (USDT) and Binance USD (BUSD) both closed flat at $1.00 each.