In a concerning turn of events, the Nigerian Naira fell to a historic low of N1,235 per US dollar on Tuesday, reflecting a 2.06 percent depreciation, or a N25 drop, compared to the previous day’s rate of N1,210. This significant devaluation occurred due to escalating demand on the parallel market, commonly referred to as the black market.
Just the day before, on Monday, the Naira had exhibited resilience by strengthening against the dollar, marking a 1.85 percent gain at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
This unexpected drop in the Naira’s value follows an optimistic statement by the finance minister, Wale Edun, made on Monday. Edun had announced that Nigeria was expecting an influx of as much as $10 billion in new foreign currency within the upcoming weeks. This significant sum was anticipated to alleviate the acute shortage of dollars in the foreign exchange market, thus raising hopes for an improved Naira exchange rate.
Monday’s NAFEM trading showcased a strengthening Naira, with one US dollar being quoted at N793.34, a favorable increase compared to the N808.27 rate recorded the previous Friday, as per data from the FMDQ.
Market dynamics exhibited a bid rate range of N701 per dollar (low) to N900 per dollar (high) among willing buyers and sellers, emphasizing the volatility of the exchange rate.
It’s noteworthy that the daily foreign exchange market turnover reported a marginal rise of 2.89 percent, climbing from $79.26 million on Friday to $81.55 million on Monday, as observed in the official market.
The Naira’s fluctuating performance underscores the ongoing challenges in Nigeria’s foreign exchange market and highlights the significance of anticipated foreign currency inflows to stabilize the currency and alleviate its acute shortages.