The Naira continues its downward spiral, trading at N1,700 per dollar in the parallel market, marking its lowest level since February 2024.
This sharp depreciation highlights the ongoing struggles in Nigeria’s foreign exchange market, which has been under severe pressure throughout 2024.
Currency traders, commonly known as black market dealers, quoted the buying rate of the naira at N1,680/$, while the selling rate hit N1,700/$, giving traders a modest profit margin of N20 per dollar.
This depreciation comes just a day after the naira traded at N1,675/$, representing a 1.49 percent decline within a 24-hour period.
In contrast, at the official exchange window, the naira appreciated by 2.24 percent, strengthening from N1,576.1/$ on Thursday to N1,540.78/$ on Friday.
However, this appreciation in the official window did little to ease concerns about the naira’s overall decline.
According to data from FMDQ Exchange, which tracks trading at the official market, the naira sold for as high as N1,691/$ and as low as N1,530/$ during trading hours.
The widening gap between the parallel market and official rates is creating economic uncertainty and adding pressure to the nation’s already strained financial system.
The depreciation of the naira to N1,700/$ on Friday was the latest in a week-long series of fluctuations.
Earlier in the week, the naira fell to N1,665/$ on Monday, down from N1,663/$ the previous week on September 20.
The slide continued on Tuesday and Wednesday, as the naira hit N1,670/$ and then N1,680/$, respectively.
On Thursday, the currency rebounded slightly, trading at N1,675/$, only to fall again to N1,700/$ on Friday.
The official market has seen its own share of fluctuations.
The naira depreciated to N1,562.66/$ on Monday, down from N1,541.52/$ on September 20, before falling further to N1,658.48/$ on Tuesday and N1,667.72/$ on Wednesday.
It wasn’t until Thursday that the currency appreciated to N1,576.1/$, offering a brief period of relief.
However, the larger trend remains one of volatility, with the naira struggling to maintain stability in both the parallel and official markets.
The recent depreciation comes despite efforts by the Central Bank of Nigeria (CBN) to stabilise the foreign exchange market and boost the value of the naira.
Earlier this year, on January 29, 2024, the CBN announced a comprehensive plan aimed at improving liquidity in the foreign exchange market in the short, medium, and long term.
This plan included reforms designed to harmonise Nigeria’s multiple exchange rates, increase transparency, and reduce the potential for arbitrage opportunities.
Arbitrage occurs when traders exploit the price differences between the official and parallel market rates, further destabilising the currency.
The CBN’s reforms also included measures to address the country’s dollar shortage, which has worsened in recent years due to falling oil revenues and a growing demand for foreign currency by businesses and individuals.
