The naira is still struggling to find its footing against the dollar since the beginning of the current week.
On Monday, the Central Bank of Nigeria, CBN, reported the exchange rate at N1,605.6284 per dollar in the Nigeria Foreign Exchange Market (NFEM). However, the Naira’s decline persisted, with the exchange rate falling to N1,606.6413 per dollar on Tuesday and further deteriorating to N1,608.6036 per dollar by Wednesday.
The story Is still the same at the close of trading on Thursday as the naira depreciated further to N1,609.6357.
The same negative run is reflected in the parallel market as the local currency exchanged for 1625 dollar, a clear departure from the gains of the previous week.
Several factors contribute to this depreciation. Nigeria’s foreign exchange reserves are under significant pressure, primarily due to volatile oil prices and the nation’s reliance on oil exports for foreign currency. As oil remains a critical component of Nigeria’s economy, any fluctuations in oil revenue can severely impact the Naira’s value.
Moreover, ongoing inflation in Nigeria has intensified these challenges. Rising costs for goods and services, driven by supply chain disruptions and increased production expenses, have eroded consumer and business purchasing power. This inflationary climate compels individuals and companies to convert their holdings into more stable currencies, such as the dollar, further exerting pressure on the Naira.
Analysts highlight the urgent need for policy responses to stabilise the currency and restore confidence in Nigeria’s economy, as illustrated by the exchange rate movement from N1,605.6284 on Monday to N1,608.6036 on Wednesday. Collaboration among stakeholders—including the government, the CBN, and the private sector—is essential to tackle the structural issues affecting the currency and foster a more stable economic landscape.
