Naira Continues In its Decline Against the Dollar

The Nigerian foreign exchange (FX) market saw a massive fall in Naira's value, which traded at its highest to reach N1,399/$ at the official market on Thursday.

Data from the Financial Markets Dealers Quotations (FMDQ) shows that the Naira fell by 6.15% compared to the N1,313 rate observed during intraday trading the previous day.

Also, the lower segment of intraday trading was reported to experience a decline of 11.28%, with the dollar being quoted at N789 on Thursday and N700 on Wednesday.

Thursday trading finished with the Naira declining by 2.08% against the dollar. Trading finished at N900.96, far from how it traded at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday at N882.24.

These developments underscore growing concerns about the naira's stability in the face of persistent challenges in the foreign exchange market, with implications for various sectors of the economy.

While at the parallel market, the naira traded against the dollar for N1,416/$. This significant decline can be attributed to the scarcity of dollars, as traders have devised dubious ways to hoard the limited dollar.

The recent exchange rate shows a significant decline of 15.19% year-on-year compared to how it traded for the N1,200 rate recorded at the start of the month.

What is The CBN Saying?

Cardoso emphasised a coordinated approach with fiscal measures to expedite the process, stating, 

• We believe that the naira is undervalued, and coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate.

He highlighted collaborative efforts and pointed to initiatives ensuring that all foreign exchange (FX) inflows pass through the Central Bank.

On Tuesday, the naira showed resilience against the dollar in the official foreign exchange market to close at 5.1% or N878.61/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEM).

This improved compared to the previous trading day rate, which closed at N925.34/$1.