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On Thursday, the naira experienced a decline to N956/$ on the official Investor and Exporter forex window, signaling a significant 13.78% drop from the previous day’s closing rate of N840.53/$, as reported by FMDQ Securities Exchange. The decrease in dollar supply, amounting to a 46.77% reduction, contributed to this unsettling trend.
The forex market saw a decrease in the turnover of dollars traded, plummeting from $198.21m on Wednesday to $105.50m. Trading commenced at N800.90/$, reaching highs of N1136/$ and N615/$ throughout the day, ultimately concluding at N956.33/$.
Despite recent efforts by the Central Bank to address the backlog of foreign exchange forward contracts, the naira continues to grapple with instability. Shockingly, the naira has become one of the worst-performing currencies globally, witnessing a staggering 40% loss in value since June, according to revelations from the World Bank.
The Economic Intelligence Unit, the research arm of the Economist Group, highlights the inadequate firepower of the Central Bank to clear the backlog of foreign exchange orders, forewarning continued pressure on the naira. It emphasizes an unsupportive monetary policy in Nigeria, indicating a persistent strain on the naira, with the market lacking adequate supply and facing challenges in clearing foreign exchange orders. This situation keeps foreign investors on edge, contributing to an unstable exchange rate regime and periodic devaluations amid high inflation and ongoing disparities with the parallel market.
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