The Nigerian naira weakened against the dollar on Friday, December 22nd, 2023, falling 2.71% to close at N885.88/$1.
This decline, coupled with a 22% drop in forex turnover to $92.16 million, has raised concerns about potential impacts on the upcoming Christmas holiday.
Data from the NAFEM, the platform where forex is officially traded, showed the naira’s loss representing a N23.97 depreciation compared to its Thursday close of N861.91.
Analysts attribute the naira’s weakness to a combination of factors, including increased demand for hard currency ahead of the Christmas holidays and continued concerns about Nigeria’s oil production and global economic uncertainties.
The domestic currency depreciated 2.71% to close at N885.88/$1 to a dollar at the close of business on Friday, data from the NAFEM where forex is officially traded, showed.
Similarly, the naira depreciated at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 0.16%, quoted at N1230/$1, while peer-to-peer traders quoted around N1163,35/$1.
The naira’s depreciation could have implications for Christmas spending, as it makes imported goods more expensive. However, the Central Bank of Nigeria has assured the public that it is committed to maintaining exchange rate stability and will take necessary measures to address the situation.
The former President and Chairman governing council of, the Chartered Institute of Stockbrokers (CIS) and the Managing Director, of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe in an exclusive chat with Naijaonpoint said for the exchange rate to be stable, market and participants confidence is key.
Managing Director/CEO, of Financial Derivatives Company Limited, Bismarck Rewane had said in a report that the naira is expected to remain volatile on lingering forex supply concerns.
The dollar dearth means speculative buying is likely to continue, with an increasing number of market participants taking long positions on the dollar while shorting the naira.