FX market under pressure as naira falls to 1,140/$1 on black market
By Sodiq Adelakun
The foreign exchange market is experiencing renewed pressure as the Nigerian naira continues to weaken against the U.S. dollar.
On Wednesday, the naira fell to 1,140 per dollar on the parallel market, commonly known as the black market.
This represents an 8.91 percent depreciation compared to the average exchange rate of N1,046.66 on Tuesday. The decline in the naira’s value follows a shortage of dollars on the black market, which caused the currency to fall to an average rate of N1,046.66 per dollar on Tuesday.
This rate is 2.61 percent weaker than the N1,020 quoted on Monday. In specific locations, such as Festac and the airport, the dollar was sold for N1,080 and N1,030 respectively. In Ibadan, it was sold for N1,025 per dollar.
The weakening of the naira against the dollar has raised concerns about the stability of the foreign exchange market.
“Individuals who bring dollars for us have stopped selling because of the way the rate is fluctuating. So there is a slight shortage of dollars and demand is rising,” one of the street traders said.
The Naira on Friday strengthened against the dollar, gaining 22.13 percent (N290) as the dollar fell to N1,020 on Friday from the peak of N1,310 on Thursday last week on the black market.
At the Autonomous Foreign Exchange Market (NAFEM), market on Tuesday, naira weakened further as the dollar was quoted at N869.91 as against N809.02 quoted on Monday, data from the FMDQ indicated.
Willing buyers and willing sellers quoted the dollar at a spot rate of N1,100 the highest ever and at the low rate of N700/$1 at the official market.
The depreciation of the naira at the NAFEM followed low dollar supply as the daily foreign exchange market turnover declined by 19.08 percent to $70 92 million on Tuesday from $87.65 million recorded on Monday.
Nigeria’s currency lost 4.24 percent of its value against the dollar at the official market, following a decline in dollar supply on Monday.
After trading at the Nigerian NAFEM on Monday, dollar was quoted at N809.02 as against N776.14 quoted on Friday, data from the FMDQ indicated.
The daily foreign exchange (FX) market turnover declined by 11.30 percent to $87.65 million on Monday from $98.82 million recorded on Friday.
On Monday, the Naira began and ended trading at N1,020 per dollar on the parallel market, after initially strengthening to N970/$1.
Over the weekend, the Naira experienced a boost, reaching N970 per dollar on the black market, due to optimistic views regarding the government’s efforts to increase dollar liquidity in the foreign exchange market.
Currency traders are anticipating further appreciation of the Naira today, as there is an expectation of increased dollar flows from both buyers and sellers at the NAFEM.
