The official exchange rate experienced a notable decline of 2.97%, settling at N1571.31 per US dollar, while intraday trading reached a peak of N1851 against the dollar on Thursday, February 22nd, 2024.
This surge coincided with increased demand pressure, further exacerbating the depreciation trend of Nigeria’s currency, evident in the negative trajectory observed in the activities of the black market.
Despite the Central Bank of Nigeria (CBN) implementing various policies aimed at bolstering the supply of foreign exchange, challenges persist in this regard.
Data from the Nigeria Autonomous Foreign Exchange Market (NAFEM), where forex is officially traded, reveals a depreciation of the domestic currency by 2.97%, concluding the business day at N1,571.31 to a dollar.
- This represents an N46.73 gain or a 2.97% increase in the local currency compared to the N1,571.31 closed on Wednesday.
- The intraday high recorded a N1851/$1, while the intraday low was N1300/$1, representing a wide spread of N551/$1.
- According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $192.25 million, representing a 11.68% increase compared to the previous day.
- However, the Naira depreciated against dollar in the parallel forex market, where forex is unofficially traded, with the exchange rate quoted at N1,880/$1, reflecting a 2.66% decrease from the N1,830 rate it closed at the previous day.
- Additionally, the Naira weakened against the Euro by 5.36%, closing at N1960/EUR1 compared to N1720/EUR1 reported the previous day.
- The Great British Pound (GBP) closed at £1/N2260, a decline from £1/N2,210 recorded the previous day, this marks a notable decrease of 2.21% compared to the rate recorded the previous day.
Nairametrics reported that financial analysts are advocating for a re-evaluation of policies to safeguard the Nigerian Naira amid escalating forex rates, despite efforts by the Central Bank of Nigeria (CBN) to stabilize its value.
The recent decline in the Naira’s value across official and parallel markets has prompted suggestions from financial experts to mitigate currency volatility and prevent further depreciation.
The CBN had announced a series of measures aimed at enhancing transparency and stability in the foreign exchange market while addressing malpractices.
However, while the analysts acknowledge the positive aspects of the CBN’s recent policies aimed at managing pressures in the foreign exchange market, they highlight that these measures fail to directly address the fundamental issue of limited supply.
Analysts interviewed by Nairametrics in response to the Naira’s sharp decline following exchange rate harmonization propose reassessing the government’s foreign exchange management strategy.
They advocate for shifting towards a managed float system to allow flexibility in implementing initiatives to bolster foreign exchange reserves, such as boosting oil production, enhancing agricultural exports, and incentivizing foreign remittances.
