By Sodiq Adelakun
The Nigerian Naira witnessed a 0.53 per cent decline against the US dollar on Thursday, mainly driven by increased demand for the greenback in the parallel market.
In the morning trading session, the exchange rate rose to N945 for one US dollar, surpassing the N940 rate observed on Wednesday in the black market.
Traders at Lagos International Airport reported that individuals and importers were actively purchasing dollars for various purposes, including business travel, school fees, medical expenses, and tourism.
The depreciation of the Naira was also observed in Nigeria’s official foreign exchange market, known as the Investors’ and Exporters’ (I&E) forex window. Here, the Naira fell by 2.16 per cent, with the dollar quoted at N758.12 on Wednesday compared to N742.10/$1 on Tuesday, according to data from the FMDQ.
However, the increased demand for the US dollar suggests a lack of confidence in the stability of the Naira, prompting individuals and businesses to seek alternative currencies for their transactions.
This depreciation of the Naira against the dollar could have implications for the Nigerian economy, as it may lead to higher import costs and inflationary pressures.
The weakening of the Naira may also impact the purchasing power of Nigerian citizens, making imported goods more expensive and potentially reducing their standard of living.
It is essential for policymakers to address the underlying factors contributing to the depreciation of the Naira, such as low oil prices, weak economic growth, and capital outflows.