Tony Chukwunyem 
The naira fell to a fresh record low on the official market on Wednesday, closing at N1,681.65/$1 compared to N1,671.32/$1 on the previous day, data from FMDQ shows.
However, the local currency was unchanged at N1,725 per dollar on the parallel market yesterday, according to currency dealers.
In its latest rating report on Nigeria published over the weekend, leading credit rating agency, Fitch Ratings, said that despite the Central Bank of Nigeria’s (CBN) reform measures, the country is still grappling with fx market instability.
The report stated: “The Central Bank of Nigeria is initiating several measures to address FX liquidity challenges and formalise FX activity to support the currency.
These include plans to introduce an electronic FX matching platform for all FX transactions effective December 1, 2024, to provide intra-day prices in real-time and enhance transparency.
“The CBN has also raised the monetary policy rate five times by a cumulative 850bp to 27.25 per cent since February 2024.
However, Fitch believes that the FX market has yet to stabilise, and the ongoing flexibility of the exchange rate remains to be tested.”
Commenting on the increase in Nigeria’s gross foreign exchange reserves, which, it noted, rose to $39 bn in mid-October from a low of $32.1 bn in midApril, the rating agency attributed the accretion to official disbursements, remittances, portfolio inflows, and an improved trade balance.
“We forecast FX reserves to rise to 6.1 months of current external payments at end- 2024 (‘B’ median 3.7) and to average 5.3 months in 2025-26,” Fitch stated. The agency, however, questioned the true net reserves position, pointing out that about a quarter of current gross reserves are comprised of FX swaps with local banks.
“There is significant uncertainty over the size of net reserves. We estimate that around one-quarter of current gross reserves are made up of FX swaps with local banks, although we expect most of these to continue to be rolled over,” Fitch stated, noting that while these FX swaps are expected to be rolled over, they still contribute to uncertainty in the FX market’s stability.
