Nigeria’s currency, the Naira, experienced a turbulent week with significant fluctuations across different exchange platforms. Amidst ongoing liquidity issues and a lack of intervention from the Central Bank of Nigeria (CBN) since October, the Naira’s value has been under considerable pressure.
On the official segment of the Nigerian Autonomous Foreign Exchange Market (NAFEM), the Naira faced a sharp depreciation against the US Dollar. By today, it had weakened to N841.14/$1, a decline of N22.15 or 2.71% from Wednesday. This notable depreciation trend is attributed to a forex liquidity squeeze that has impacted the market.
The spot market also displayed volatility during today’s session, with exchange rates ranging widely from N600/$1 to N1,140/$1 as offered by customers. Despite these challenges in the official market, the parallel market told a different story, with the Nigerian currency appreciating by N5 to close at N1,130/$1.
In contrast to its performance against the US Dollar in the official segment, the Naira gained ground against both the Pound Sterling and Euro, selling at N1,029.74/£1 and closing at N898.45/€1, respectively.
The Peer-2-Peer (P2P) window saw the Naira depreciate, settling at N1,114/$1. Meanwhile, despite hitting an all-time low of N1.140/$1 in the official market, it appreciated by 0.88 percent in the black market to close at N1,125/$.
The recent adjustments by Nigeria Customs in the foreign exchange rate for clearing imported goods have led to an increase in costs for imported goods nationwide. Business and economy expert Dave Ibemere is closely observing these evolving market conditions.
As traders and businesses navigate this period of uncertainty, there are expectations that the CBN will soon have sufficient dollars to meet local forex demands. However, CBN Governor Yemi Cardoso has yet to comment on potential future liquidity injections or establish new trading bands for the Naira.
