THE Nigerian naira depreciated further on Thursday, April 25, and was exchanged for N1,400 against the US dollar on the black market despite the Central Bank of Nigeria’s (CBN) below-market-rate sales to Bureau De Change Operators (BDCs).
Findings showed the depreciation followed renewed demand pressure in the foreign exchange (FX) market.
Economic analysts said the naira is under pressure because of Nigeria’s weak exports and inability to meet the Organisation of Petroleum Exporting Countries (OPEC) quota assigned to Nigeria at 1.7 million barrels per day.
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“The fiscal side needs to take responsibility and show it is working, the structural issues are still there, and food inflation is so high. The monetary policy is not enough. Already, the naira has lost about N400 against the US dollar this month, as dynamics changes in Nigeria’s foreign exchange market,” an economist, Olumide Adesina, said in reaction to the naira’s depreciation.
With the current exchange rate, the naira has lost 19.64 per cent in two weeks compared to N1,125 per dollar quoted on April 12, 2023, on the parallel market, popularly called the black market.
On Wednesday, the naira depreciated to N1,308.52 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Compared to the level on April 12, 2024, the naira has weakened by 12.69 per cent from N1,142.38 per dollar in the last two weeks, according to data from the FMDQ Securities Exchange.
The naira has retreated this week as dollar liquidity dips on the back of the exit of some foreign portfolio investors spooked by the Israel-Hamas war and a stronger dollar.
“The market needs exchange rate hedging products to manage volatility. CBN may not intervene fully in the market because they have been called out severally for dipping the reserve in their interventions. In the coming days, speculators may dominate the market,” an economist, Kingsley Obiakor, said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.