The Nigerian naira experienced a sharp decline, falling to 1,140 per dollar on the black market, signaling an 8.91 percent depreciation compared to Tuesday’s average of N1,046.66.
This latest drop underscores the growing pressure on the foreign exchange (FX) market, which has been grappling with various challenges.
On Tuesday, the naira had already weakened to an average rate of N1,046.66 per dollar due to a shortage of dollars on the black market, marking a 2.61 percent (N26.66/$) decrease from Monday’s rate of N1,020. Notably, specific rates were reported, with the dollar being sold for N1,080 in Festac, N1,030 at the Airport, and N1,025 in Ibadan.
A street trader commented on the situation, stating, “Individuals who bring dollars for us have stopped selling because of the way the rate is fluctuating. So there is a slight shortage of dollars and demand is rising.”
The naira had shown a brief strengthening against the dollar last Friday, gaining 22.13 percent (N290), dropping the dollar rate to N1,020 from the previous peak of N1,310 on the black market. However, this positive trend appears to be short-lived as pressures mount on the FX market.
At the Autonomous Foreign Exchange Market (NAFEM) on Tuesday, the naira weakened further as the dollar was quoted at N869.91, compared to N809.02 on Monday, according to data from the Financial Markets Dealers’ Quotations (FMDQ).
Market participants at the NAFEM quoted the dollar at a spot rate of N1,100, an all-time high, while the low rate was N700/$1 at the official market. This depreciation followed a decline in dollar supply, with the daily foreign exchange market turnover decreasing by 19.08 percent to $70.92 million on Tuesday from $87.65 million on Monday.
On the official market, Nigeria’s currency lost 4.24 percent of its value against the dollar, reflecting a drop in dollar supply on Monday. After trading at N809.02 on Monday, the dollar was quoted at N776.14 on Friday, based on FMDQ data. The daily FX market turnover also declined by 11.30 percent to $87.65 million on Monday from $98.82 million on Friday.
Despite the challenges, currency traders anticipate a potential appreciation of the naira today, driven by expectations of increased dollar flows from willing buyers and sellers at the NAFEM. The situation remains dynamic, and market participants are closely monitoring developments in the coming days.
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