The Nigerian naira weakened further on Monday, sliding to ₦1,670.75 per dollar in the official market and ₦1,748 per dollar in the parallel market. This depreciation occurred alongside a significant drop in daily foreign exchange (FX) turnover, which fell by 71% to $81.17 million.
The decline in FX turnover and weakening of the naira come as the Central Bank of Nigeria (CBN) continues its strategic interventions to stabilize exchange rates. Analysts predict that the naira’s value will likely fluctuate within a narrow range across market segments in response to these ongoing CBN measures.
Speaking to *The Punch*, Muazu Yakubu, a Bureau de Change operator at Lagos’ local airport, noted that the naira was sold at ₦1,748 per dollar and bought at ₦1,742 per dollar. Meanwhile, another currency dealer, Mallam Faruq, operating on Lagos Island, confirmed that rates were slightly lower, with the naira sold at ₦1,746 and bought at ₦1,740.
On the Nigerian Autonomous Foreign Exchange Market (NAFEX) on the FMDQ Exchange, the naira also showed signs of strain, falling from ₦1,600 per dollar on Friday to ₦1,670.65 on Monday. The trading session saw a turnover of $284.93 million, but the official market recorded volatility, with the naira trading between a high of ₦1,677 and a low of ₦1,585.67 per dollar.
Recent Performance and Market Expectations
In the parallel market, the naira had depreciated by three basis points over the past week, settling at ₦1,740 per dollar. However, in the NAFEX window, it appreciated slightly, strengthening by four basis points week-on-week to trade at ₦1,600 per dollar.
Analysts believe that while CBN interventions may help in stabilizing the naira over the short term, persistent pressures from the high demand for dollars and limited FX supply continue to challenge the naira’s stability.
CBN and IFC Collaboration to Support Local Currency Financing
In a related development, the CBN announced a new agreement with the International Finance Corporation (IFC) aimed at expanding local currency financing options for Nigerian businesses. This partnership is expected to mitigate foreign exchange risks and help the IFC increase its naira-denominated investments across various sectors.
According to a joint statement from CBN and IFC, the collaboration will support Nigeria’s agriculture, housing, infrastructure, energy, small and medium-sized enterprises, and the creative industries. The IFC, a part of the World Bank Group, aims to significantly boost its financial support in Nigeria, with a target of over $1 billion in naira-focused investments in the coming years.
This move is anticipated to benefit sectors that rely heavily on foreign currency by providing them with more stable local currency financing, thereby reducing exposure to foreign exchange volatility.
With these initiatives, CBN and IFC hope to foster a more resilient economic environment in Nigeria, reducing currency risks for businesses and promoting broader economic growth across key industries.
