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Naira plummets in official and parallel markets amid dollar scarcity

EditorAmbhini Aishwarya
Published 11/22/2023, 06:30 AM
© Reuters.

The naira experienced a sharp depreciation in both the official and parallel currency markets this week. On Wednesday, the Nigerian currency fell to N1,150/$ in the parallel market, with traders actively buying at N1,145 and selling at N1,150 as they navigated through a period marked by a notable availability of dollars.

The downturn reflects a broader trend of currency volatility in Nigeria, which has been particularly evident since the Central Bank of Nigeria's (CBN) reforms in June. The absence of a second consecutive Monetary Policy Committee meeting under CBN Governor Dr. Olayemi Cardoso has also contributed to the market's instability.

In Lagos on Tuesday, traders reported intense activity and highlighted a scarcity of dollars that persists despite high demand. This shortage was mirrored by the official market's performance, where the naira fell sharply by 10.78% to close at N830.97/$1 compared to Monday's rate of N750.14/$1. The spot rates fluctuated significantly, reaching a peak of N1,121 and dipping to a floor of N600.

Forex turnover also saw a contraction, decreasing by 30.71% to $122.46 million from Monday’s transaction volume of $176.75 million.

This latest depreciation marks the first official market decline since last week, with the naira plummeting by N80.82 from Monday's close. In the parallel market, exchange rates remained consistent at N1,130/$1 on Tuesday as confirmed by transactions made by Dayyabu Mistila, a Bureau de Change operator.

The CBN's ongoing efforts to stabilize the naira have faced challenges as these recent fluctuations demonstrate the difficulties in managing currency stability amid varying economic pressures.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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