FX pressure intensifies as dollar hits record low of N1,155 on black market
By Sodiq Adelakun
The pressure on the foreign exchange (FX) market intensified on Thursday as the value of the Nigerian naira continued to decline against the U.S. dollar.
The black market, also known as the parallel market, saw the dollar being quoted at an all-time low of N1,155. In certain parts of Abuja, the capital city, the exchange rate reached N1,150, while in Lagos, some traders were selling dollars at N1,155.
In other areas, the rate was slightly lower at N1,120 per dollar.This significant depreciation of the naira represents a 5 percent decline, equivalent to N55, in less than 12 hours. The previous day, the exchange rate stood at N1,100 per dollar.
This rapid depreciation has raised concerns about the stability of the Nigerian currency and the overall health of the FX market.
The decline in the value of the naira can be attributed to various factors, including the scarcity of foreign currency reserves, a decline in oil prices, and the impact of the COVID-19 pandemic on the Nigerian economy. These factors have put immense pressure on the FX market, leading to a shortage of dollars and an increase in demand.
The combination of demands from 43 items restored to access foreign exchange and demands for school fees, among others, drove the sharp fall in the value of naira in two days.
The pressure on the FX market intensified on Tuesday and Wednesday as naira fell to lowest across market segments on strong demand after the Central Bank of Nigeria (CBN)’s move for a single forex market rate.
However, the Naira strengthened against the dollar at the official market, gaining 6.77 percent despite declined liquidity in the market on Wednesday.
At the close of trading on Wednesday the dollar was quoted at N790.68, which was weaker than N848.12 quoted on Tuesday at Investors’ and Exporters’ (I&E) forex window, data from the FMDQ showed.
The daily FX market turnover, which reflects the level of transaction or inflows in the market, declined by 47.96 percent to $69.88 million on Wednesday from $134.28 million recorded on Tuesday.
