Naira Depreciates Further on Parallel Market Despite $2.25bn FX Lifeline

Analysts say funding inadequate amid huge backlogs

The Naira has continued to depreciate against the US Dollar despite the Central Bank of Nigeria (CBN) receiving the Afreximbank's $2.25 billion credit to support the settlement of foreign exchange (FX) backlogs and douse pressure on the local currency.

The nation's currency depreciated to N1,245 to a dollar on the parallel market yesterday. It had closed at N1,215/$, N1,220/$ and N1,225/$ on January 2nd, 3rd, 4th, 2024, respectively on the parallel FX market.

On the other hand, on the official FX window, the Naira closed at N869.13/$ yesterday. THISDAY's findings also showed that the Naira traded at N988.46/$ and N1,035.12/$ on January 2nd and 3rd, 2024 respectively on the official window.

The federal government recently received $2.25 billion out of the $3.3 billion foreign exchange (FX) facility from Afreximbank.

The long-awaited credit support seeks to ameliorate the acute FX shortage in the country which had constrained economic activities and doused investors' confidence.

It was learnt that Nigeria would pay an interest of 11.85 per cent per annum on the $3.3 billion “pre-export finance facility which some commentators had said was too expensive. Until now, the fine details of the transaction, which has a five-year tenure, had been withheld by all parties involved.

Earlier in December, President Bola Tinubu had assured Nigerians of the commitment by his administration to resolve the FX backlogs through injection of funds into the market.

It was estimated that there are between $7 billion to $10 billion FX backlogs to be cleared.