Nigeria’s currency, the Naira, yesterday, exchanged at ₦1,705 per United States Dollar at the parallel market a decline from ₦1,655 per $1.00 just a week before, reflecting a consistent downward trend.
Naijaonpoint reports that the latest exchange rate shows the nation’s currency is experiencing renewed demand pressure in the parallel market, with a notable depreciation observed over the past week.
The steady decline marks a departure from the previous weeks, where daily fluctuations remained within a narrow range of ₦1,645 to ₦1,655 per $1.00 over the last two months.
According to Vanguard, market participants have expressed that supply shortages in the past fortnight may have contributed to this depreciation.
This situation may also have repercussions for the official market, as data from FMDQ reveals that the indicative exchange rate for the Nigeria Autonomous Foreign Exchange Market (NAFEM) fell to ₦1,541.94 per $1.00 yesterday, down from ₦1,540.78 per $1.00 over the weekend, representing a depreciation of 96 kobo.
The exchange rate trends observed in the third quarter of 2024 (Q4’24) suggest a reversal from the positive momentum seen towards the end of the previous year.
Naijaonpoint recalls that the Naira concluded the previous year in the parallel market at ₦1,215/$1.00, following a peak of ₦1,800/$1.00 during the third quarter of 2023.
The local currency continued this positive trajectory into the new year of 2024, appreciating to ₦1,220/$1.00.
Nevertheless, this trend experienced a reversal in the second quarter, with a consistent decline leading to a quarterly average of ₦1,620/$1.00 by the end of that period in 2024.
After two months of relative stability at ₦1,630/$1.00 during most of the third quarter, a new phase of depreciation appears to have commenced, raising concerns that the significant depreciation observed in Q4 2023 may be poised to recur.
Economic stakeholders have expressed concerns regarding further price increases, attributing this to the ongoing depreciation of the Naira against the dollar, particularly in the parallel market.
Commenting on the recent trend, the President Bank Customers Association of Nigeria, BCAN, Dr. Uju Ogubunka said: “The depreciation of the naira can be associated with demand chasing limited supply. It is the result of FX Supply gaps.
“The implications can be many but it shows the level of confidence or lack of it in the capacity of the country to meet the FX requirements in the market.
“Generally, it will impact on the cost of imported goods into the country and the prices at which such goods will eventually be sold on arrival.
“So, we should be prepared to complain more about high prices of goods in the market.”