By Bolaji Peters (SIWES student, Polytechnic Iresi)
The Nigerian naira witnessed a historic decline against the US dollar in the official foreign exchange market, hitting N1,534/$ on Monday.
This represents a 3.93% drop compared to the previous week’s close. It marks the lowest official exchange rate since the Central Bank of Nigeria floated the naira in June 2023.
The rapid depreciation of the naira is attributed to factors such as high inflation and a fragile economy, prompting analysts to urge the government to implement measures for stability and inflation control.
Meanwhile, in the parallel market, the naira traded between N1,480 and N1,490 on Monday, indicating a recent trend of higher rates compared to the official market, especially following the FMDQ’s revision of its exchange rate calculation methodology.
Dollar sales by banks significantly declined by 56.58% to $253.77 million on Friday from the peak of $584.53 million on the first trading day after the CBN’s directive for banks to offload excess dollars in the official FX market.
Commercial banks sold $1.97 billion within the week.
Bureau de change operators quoted the buying price of the US dollar at N1,480 and the selling price at N1,503, showcasing a considerable spread between buying and selling rates, indicative of market volatility.
The ongoing weakness of the naira presents continued challenges.
