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Naira Loses Key Support Amid US Dollar Index Drop to Monthly Low

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  • The Nigerian naira has maintained a downward trajectory, losing its hold at the critical support level of N1,500 per US dollar.
  • Naira’s fall to a new low of 1,540 per dollar came as the US dollar index recorded a monthly decline.
  • Also, there is a significant drop in May’s daily turnover compared to past months, reflecting tighter liquidity.

The Nigeria naira is showing signals of weakness amid the US dollar plummeting to a monthly low.

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Notably, the naira has lost its anchor at the critical support level according to a Nairametric report.

Subsequently, across the Nigerian unofficial FX market, the naira slipped to a new low of 1,540 per dollar as of May 15.

However, it reclaimed slightly in the NAFEX market with a 0.39% increase as it moved from N1,455.51/USD to N1,449.80/USD.

Further, the drop in the value of naira has triggered a significant fall in May’s daily turnover compared to past months.

The overall trend in the foreign exchange market reflects a decrease in liquidity.

Also, a recent Bloomberg report noted that the naira reversed its freshly amassed gains in the FX market last week.

The loss depreciated its value, making the naira become the global worst-performing currency in April 2024.

CBN Insufficient Forex Allocation Aid the Nigeria Naira Depreciation – BDC

An official of the Association of Bureau De Change Operators (ABCON) who wants to remain anonymous, reacted to the continuous naira decline.

The official cites the CBN’s lack of USD supply to BDC operators as a key factor.

Following CBN’s insufficient dollar allocation, the BDC operators source dollars from the parallel market at higher rates. So, the trend results in higher naira-USD rates for customers, thinning the naira value.

Further, the official rebuffs growing rumors that BDC operators are responsible for fluctuations in exchange rates.

The BDC official stated: “The CBN last provided dollars to only 30% of licensed operators.”

 

 

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