Naira Slips Again As Demand For US Dollar Increases

The depreciation of the Nigerian currency, the Naira, against the United States (US) dollar persisted yesterday, with the naira trading at ₦1,540.57 in the official market.

Naija News reports that this decline is occurring amid a growing demand for dollars, which has resulted in the naira losing value against foreign currencies.

The Central Bank of Nigeria (CBN) has continued its interventions in the foreign exchange market to maintain the local currency within the ₦1,500 range.

The naira’s decline at the official exchange rate has been attributed to what sources describe as an inadequate supply of dollars to satisfy the rising demand.

It is worth noting that the exchange rate fell by ₦18.95 last week, concluding at ₦1,536.89 in the official market.

However, the market commenced this week with the dollar priced at ₦1,540.57, primarily driven by heightened demand pressures.

During the previous week, the CBN sold $92.10 million, bringing the total foreign exchange sales to $230.90 million, amidst fluctuations in external reserves.

In the informal black market in Lagos, the dollar was purchased at ₦1,560 and sold for ₦1,570 yesterday.

The unification of the exchange rate market is also observed to have narrowed the gap between the official and parallel markets.

Nevertheless, experts caution that the combination of rising demand and limited dollar supply poses a threat to the naira’s stability.

For example, the recent decision by Dangote Refinery to cease sales in naira may exacerbate demand, potentially driving up the exchange rate.

Currently, the importation of petroleum products has become prevalent, with marketers competing for the scarce dollars available in the market to fulfil their obligations.

In a chat with Daily Trust, Economist Dr Marcel Okeke expressed that the recent announcement from Dangote Refinery is detrimental to the foreign exchange market.

He indicated that as marketers begin to seek foreign exchange to purchase petroleum products from the refinery or abroad, the situation may worsen.