Naira Depreciation Causes Drop in Dollar Supply and Foreign Reserves

Due to a significant depreciation of the Naira on Tuesday, the supply of dollars at the official foreign currency market decreased by 18.26%, falling to $201 million from $246.44 million on Monday, according to FMDQ data.

At the same time, the Central Bank of Nigeria (CBN) reported a decrease in the nation's foreign reserves, which fell by 0.68% to $36.620 billion on August 12, 2024, down from $36.872 billion on August 7, 2024.

On Tuesday, the Naira depreciated to N1,582.09 per US dollar in the official market. This depreciation follows a two-week period during which the Naira had strengthened against the dollar due to the Central Bank of Nigeria’s Retail Dutch Auction System (rDAS).

The rDAS was introduced last week to manage the rising demand for dollars. In response to the increased demand, the apex bank sold $815.36 million to end customers in its auction to support the Naira.