Naira trades at N1,640 as dollar scarcity hits black market
The naira on Tuesday traded at N1,640 following strong demand for dollars amid scarcity on the parallel market, popularly called the black market.
This represents 44 percent loss year-on-year and a daily loss of N5 when compared to N918 and N1,635 quoted in September 1, 2023 and on Monday, September 2, 2024, according to street traders and some online platform that collates exchange rates at the unregulated market.
“There is scarcity of dollars in the market,” one street trader said. The naira on Monday opened the first trading day of September on a positive note, gaining across foreign exchange (FX) market despite a drop in the dollar supply.
After trading on Monday, the naira gained 0.81 percent or N12.79 as the dollar was quoted at N1,585.77 compared to N1,598.56 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ Securities Exchange indicated.
The dollar supplied by willing buyers and willing sellers declined to lowest in 18 trading days. It dropped by 58.81 percent to $71.18 million on Monday from $172.80 million recorded on Friday at NAFEM.
According to the market summary, the intraday high closed at N1,619 on Monday compared to N1,610.50 closed on Friday while the intraday low printed at N1,500 on the same day from N1,511 quoted on Friday.
Last week, the Naira depreciated by 1.78 percent against the US Dollar, ending at N1,598.56/$1 at the NAFEM window, as reported by Coronation Asset Management. This decline brought its year-to-date depreciation to 43.25 percent, up from 42.23 percent the previous week. In the parallel market, the Naira also weakened by 1.22 percent, closing the week at N1,640/$1.
Total inflows through the NAFEM window reached US$403.00 million, primarily driven by non-bank corporates and the exporters/importers window. However, these inflows were insufficient to counterbalance the high demand for US dollars, which continues to push the exchange rate downward.
Additionally, the Central Bank of Nigeria (CBN) reported a slight decline in gross foreign exchange reserves by 0.32 percent, or $116.04 million, ending the week at $36.32 billion. This decline has been consistent over the past four weeks and is attributed to the CBN’s interventions in the foreign exchange market.
