The Nigerian Naira’s value against the US Dollar dropped in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on April 16, 2024. This decline comes amid concerns regarding the depletion of Nigeria’s foreign exchange reserves.
Depreciation in Official Market
In the official market, the Naira depreciated against the Dollar by 1.07%, or N12.10, to trade at N1,148.14/$1. This represents a decline from the previous closing rate of N1,136.04/$1.
Loss Against Other Currencies
The Naira also depreciated against the Pound Sterling and the Euro. Against the Pound Sterling, it lost N28.80 to close at N1,446.45/£1, compared to N1,417.65/£1 on Monday. Against the Euro, it declined by N22.87 to settle at N1,234.79/€1 from N1,211.92/€1.
Spike in Forex Trades
Despite the Naira’s depreciation, the value of forex trades in NAFEM increased on April 16. Forex trades closed at $268.75 million, representing a rise of $17.15 million or 6.8% compared to the previous day’s $251.60 million.
Concerns about Foreign Exchange Reserves
The decline in the Naira’s value coincides with concerns about Nigeria’s foreign exchange reserves. These reserves have dropped significantly, by about 6.2% or $2.16 billion, in 29 days, as the Central Bank of Nigeria (CBN) takes measures to stabilize the Naira.
Parallel Market
The depreciation of the Naira in the official market has not affected its value in the parallel market. On April 16, the Naira gained N15 against the Dollar in the parallel market, trading at N1,100/$1 compared to N1,115/$1 on the previous day.
Digital Currency Market Recovery
In the digital currency market, most tokens tracked by Business Post showed a slight recovery. Solana (SOL) led the gains, rising by 3.1% to $138.95. Dogecoin (DOGE) appreciated by 0.9% to $0.156, Litecoin (LTC) grew by 0.8% to $79.03, and Ethereum (ETH) increased by 0.9% to $3,091.61. However, Binance Coin (BNB) fell by 0.7% to $543.01, while Cardano (ADA) depreciated by 0.4572.
Conclusion
The Nigerian Naira’s depreciation in NAFEM highlights the concerns about the country’s foreign exchange reserves. While the official market experienced a decline, the parallel market showed a slight improvement in the Naira’s value. The digital currency market also displayed a modest recovery, with most tokens ending in positive territory.
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News pulse: 7 bits out of 10
- Significance of the news: 8/10 – The news is significant as it covers the performance of the Nigerian Naira against the US Dollar and other major currencies, as well as the concerns surrounding the depletion of Nigeria’s foreign exchange reserves.
- Innovative value of news: 6/10 – The news does not present any innovative or groundbreaking insights into the cryptocurrency market.
- Potential impact of the news on the market: 7/10 – The news has the potential to influence market sentiment regarding the stability of the Nigerian Naira and other currencies traded in Nigeria.
- Relevance of the news: 8/10 – The news is relevant to traders and investors operating in the Nigerian economy and the broader financial markets.
- Reliability of the news: 7/10 – The news is sourced from Business Post, a reputable Nigerian financial news outlet. However, it would benefit from citing official sources or experts to enhance credibility.
- General tone of the news: 6/10 – The news provides a neutral and factual account of the market events, without exhibiting any particular bullish or bearish bias.