Naira Dips Further as Dollar Demand Surges to ₦1,420/$
The Nigerian naira experienced a continued decline against the United States dollar on Thursday, sliding to ₦1,309/$ at the official market and ₦1,420/$ at the parallel market.
This latest exchange rate reflects a depreciation of ₦90 or 6.8 percent from Wednesday’s rate of ₦1,330, driven by heightened demand for the dollar in the foreign exchange market.
Currency traders at the bustling Wuse Zone 4 market reported purchasing the greenback at ₦1,340 and selling it at ₦1,420, indicating a profit margin of ₦80.
Malam Yahu Abubakar, speaking over the phone, attributed the naira’s decline to increased demand for the dollar. He noted that while the Central Bank of Nigeria (CBN) is addressing the situation, it has not yet impacted the market significantly.
Another trader, Abubakar Taura, expressed caution in trading due to concerns that the CBN might implement drastic measures to stabilize the dollar. This caution, he explained, was leading to higher profit margins, allowing traders to recuperate losses.
Over the past two weeks, the naira has depreciated by 26.2 percent compared to ₦1,125/$ quoted on April 12, 2023, in the parallel market.
On Monday, the CBN allocated $15.83 million to 1,583 Bureau De Change (BDC) operators to enhance liquidity in the unofficial market. Each operator received $10,000 at a rate of ₦1,021 per US dollar, aimed at stabilizing the foreign exchange market and ensuring access to foreign currency for eligible users.
At the official market, the naira closed at ₦1,309.88 against the dollar by the end of Thursday’s trading, marking a 0.10 percent drop from Wednesday’s rate of ₦1,308.52.
Forex trading volumes between willing sellers and buyers surged by 61 percent, reaching $318.08 million, surpassing the $197.54 million recorded at the Nigerian Autonomous Foreign Exchange Market on Wednesday.
CBN Governor Yemi Cardoso recently announced that as of April 2024, the naira was the best-performing currency globally. This turnaround follows a series of foreign exchange market reforms and has garnered positive sentiment from leading international investment institutions, Cardoso declared during a press briefing at the World Bank/IMF meeting in Washington DC.
Nevertheless, the sustainability of the naira’s stability over a longer period remains uncertain, prompting speculation about future strategies from the apex bank.
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