The Naira faced further depreciation against the United States dollar, continuing its downward trend in both the official and black markets. New data reveals that the Naira’s value has weakened, crossing the N1,600 mark in exchange rates.
According to FMDQ securities data, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official market, the Naira closed at N1,627.40/$ on Friday, March 8, 2024. This represents a 1.6% or N25.23 depreciation compared to the previous trading session’s rate of N1,602.17/$1.
Despite an increase in dollar supply to the market, the Naira sustained losses. FX transactions at NAFEM on the final trading day of the week totaled $269.35 million, marking a significant 63.5% surge compared to the previous day’s total of $164.76 million.
In the official market, the Naira also weakened against other major currencies. Against the Pound Sterling, it depreciated by N13.31 to close at N2,036.13/£1, and against the Euro, it declined by N8.87 to trade at N1,740.38/€1.
Similarly, at the parallel market, the Naira lost N3 against the Dollar, selling for N1,623/$1 compared to the previous day’s rate of N1,620/$1, indicating a convergence between official and black market rates.
Commenting on the situation, Amamchukwu Okafor, a Senior Consultant at Native Insight, attributed the Naira’s fall to Nigeria’s weak forex reserves. He emphasized the challenge of meeting the insatiable demand for foreign exchange amidst inadequate reserves and revenue streams.
Okafor suggested that policies should focus on moderating speculative FX demand while increasing supply, advocating for measures to combat black market activities on foreign exchange.
Meanwhile, Goldman Sachs, a US-based investment bank, has forecasted a new exchange rate for the Naira against the Dollar. The bank predicts that the Naira will rebound and close the year at N1,200 per Dollar at the official market.
