On Monday, October 14, 2024, the Nigerian currency, the naira, made a notable recovery in the official foreign exchange market, appreciating by approximately N89 against the US dollar. The naira traded at N1,551.92 per dollar, up from N1,641 on Friday, October 11, marking a significant 5.38% gain. However, this positive movement was overshadowed by a staggering decline in the parallel market, where the naira hit an all-time low of N1,700 per dollar.
This sharp contrast highlights the ongoing volatility in Nigeria’s foreign exchange market. Data from the Financial Markets Dealers Quotations (FMDQ) Exchange revealed that while the naira strengthened in the official market, currency dealers quoted the dollar between N1,540 and N1,682, indicating fluctuations and uncertainty in exchange rates.
The foreign exchange turnover in the official window also experienced a boost, reaching $343.71 million on the same day. However, the naira’s drastic drop in the parallel market raised concerns among economic analysts. Experts attribute this decline to rising demand from travelers seeking medical treatment abroad and importers attempting to circumvent the complexities associated with the official market.
Janet Ogochukwu, a senior banker and economist, expressed apprehension regarding the naira’s future, predicting further depreciation as the holiday season approaches. She noted, “We are witnessing a gradual crash in the official window, which might affect the official market. Unless regulators intervene, the naira could hit N2,000 in the parallel market and N1,700 in the official window by December.” She pointed out that the current exchange rates lack substantial backing from foreign exchange earnings, leading to instability.
Ogochukwu explained that while there has been an increase in foreign exchange reserves, this growth is not primarily from tangible exports but rather from intangible assets such as diaspora remittances and the recent domestic dollar bond issuance by the Nigerian government. She emphasized, “Nigeria is not exporting enough products to generate revenue from tangible assets,” highlighting a critical gap in the country’s economic structure.
In the days leading up to October 14, the naira had already shown signs of depreciation against the dollar in the official market. On October 11, it closed at N1,641.27 per dollar, reflecting a decline of N18.70 or 1.15% compared to the previous closing rate.
The current situation has raised alarms among economists and market watchers, who are keenly observing the Nigerian currency’s trajectory. With the festive season often increasing demand for foreign currencies, the naira’s stability remains uncertain. As the government and financial regulators navigate these challenges, the focus will be on implementing strategies to stabilize the naira and ensure a healthier economic outlook for Nigeria.
For ongoing updates and insights into the Nigerian economy and foreign exchange trends, keep following reliable news sources.
