The Nigerian naira has suffered another setback against the US dollar, both in the official and unofficial foreign exchange markets. According to the latest data, the naira weakened by 0.03% in the official market, alongside a notable depreciation in the parallel markets.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from FMDQ securities revealed that the naira fell to N1,512.45/$1 on Wednesday, July 3, 2024. This represents a slight decline from the previous day’s rate of N1,509.99/$1. Despite an increased supply of foreign exchange to the spot market, with total transactions rising by 74.4% to $213.31 million from Tuesday’s $122.31 million, the naira continued to depreciate.
The scenario was similar in the unofficial forex markets, where the naira faced significant losses against other major currencies. Central Bank of Nigeria (CBN) data showed that the naira weakened against the pound sterling by N55.48, trading at N1,914.58/£1 compared to Tuesday’s N1,859.10/£1. Against the euro, it lost N50.63, quoting at N1,624.42/€1, down from the previous day’s rate of N1,573.79/€1.
In the parallel market, often referred to as the black market, the naira also depreciated. On Wednesday, the naira lost N10 against the dollar, trading at N1,520/$1 compared to Tuesday’s rate of N1,510/$1.
Despite these declines, there is a glimmer of hope that the naira might recover. Nigeria’s external reserves, crucial for defending the currency, have increased to $34.14 billion. This boost follows a directive from the CBN, requiring all banks to deposit excess foreign exchange at its branches in Lagos and Abuja.
Additionally, the CBN has been proactive in its efforts to stabilize the naira. The bank recently conducted another round of dollar sales to licensed Bureau De Change (BDC) operators. This move is part of the CBN’s strategy to ensure sufficient liquidity in the market. The central bank has also set an exchange rate limit for BDCs selling dollars to individuals, aiming to curb excessive rate fluctuations.
The continued efforts by the CBN highlight the ongoing challenges and the need for strategic measures to stabilize the naira in both the short and long term.
