The Nigerian naira recorded another decline against the United States dollar yesterday as pressure continued across both the parallel and official foreign exce markets.
In the parallel market the naira weakened to N1,395 per dollar compared to N1,390 per dollar recorded last Friday. The latest movement reflects growing demand for foreign currency and continued volatility in the exce rate market.
Similarly the naira also depreciated in the Nigerian Foreign Exce Market NFEM where the official exce rate closed at N1,373.5 per dollar. Data released by the Central Bank of Nigeria CBN showed that the indicative exce rate rose from N1,372 per dollar last Friday to N1,373.5 per dollar representing a depreciation of N1.5 for the local currency.
As a result of the latest movement the gap between the parallel market and the official market widened further. The exce rate margin increased to N21.5 per dollar from N19 per dollar recorded at the close of trading last week.
Meanwhile activity in the interbank foreign exce market recorded significant improvement during the trading session. Market turnover rose sharply by 57.3 percent reaching 76.3 million dollars compared to 48.5 million dollars traded the previous day.
Financial analysts believe the continued pressure on the naira may be linked to increased demand for foreign exce by importers businesses and investors as well as concerns over foreign currency inflows into the economy.
Despite ongoing monetary reforms by the Central Bank of Nigeria market observers say exce rate ility will depend heavily on improved dollar liquidity stronger exports and increased foreign investment inflows into the country.
The depreciation comes amid broader economic concerns surrounding inflation rising living costs and the need for sustained foreign exce market reforms to support economic ility in Nigeria.
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