Naira fell against the dollar during trading session on Monday 10 January 2021, Trading at N568/$1 in the parallel market, representing a 0.5% percentage increase compared to the previous week. This was according to data obtained from various bureau de change operators across Nigeria.
Meanwhile, at the official Investors and Exporters (I&E) window, as at 6th of January 2021, Naira appreciated against the dollar ,opening at N417.25/$1 and closing at N416.25/$1. According to the Central Bank of Nigeria, on the 7th January 2022, naira was quoted at N414.14/$1.
The decline in Naira is associated with the high demand for dollar equivalent in the forex market. After the festive period, several businesses has reopened, resulting in a distortion in market supply and demand.
Furthermore, The official external reserve has declined in 2022. In the first six days of 2021, Nigerian external reserves dropped to $40.49billion following the withdrawal of $21.8 million by the Central Bank of Nigeria. In the first six days of 2021, Nigerian external reserves dropped to $40.49billion following the withdrawal of $21.8 million by the Central Bank of Nigeria.
As foreign exchange transactions continues to rise after the festive period, the demand for dollar is bound to increase. Thus, the in-equilibrium in the forex market is likely to continue except an intervention from the central bank of Nigeria is initiated.