On Thursday, the Nigerian naira continued its decline against the United States dollar, reaching N1,309/$ at the official market and N1,420/$ at the parallel market.
This new rate signifies a depreciation of N90 or 6.8% from the previous day’s rate of N1,330 quoted by currency traders.
The depreciation was attributed to renewed demand pressure for the dollar in the foreign exchange market.
At the Wuse Zone 4 market, currency traders reported buying the dollar at N1,340 and selling it at N1,420, resulting in a profit margin of N80.
Traders like Malam Yahu Abubakar cited increased demand for the dollar as the reason behind the naira’s decline, despite efforts by the Central Bank of Nigeria (CBN) to address the situation.
Another trader, Abubakar Taura, expressed caution in trading due to concerns that the CBN might implement drastic measures to stabilize the dollar.
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This caution, coupled with high-profit margins, allowed traders to recover losses.
Over the past two weeks, the naira has depreciated by 26.2%, compared to N1,125/$ quoted on April 12, 2023, at the parallel market.
To enhance liquidity in the unofficial market, the CBN recently allocated $15.83 million to 1,583 Bureau De Change (BDC) operators, at a rate of N1,021 per US dollar.
This allocation aims to stabilize the foreign exchange market and ensure accessibility of foreign currency to eligible end-users.
At the official market, the naira depreciated to N1,309.88 against the dollar by the end of Thursday’s trading, representing a 0.10% drop from the previous rate.
Intra-day trading saw fluctuations, with the high reaching N1,435 per dollar and the low dropping to N1,100.
Forex trading volumes witnessed a significant increase, with transactions totaling $318.08 million, a 61% rise from the previous day’s $197.54 million.
CBN Governor Yemi Cardoso declared the naira as the best-performing currency globally as of April 2024, attributing this achievement to foreign exchange market reforms and positive sentiment from international investment institutions.
Despite this achievement, the stability of the naira in the long term remains uncertain, and it remains to be seen what strategies the CBN will employ to ensure its stability.
