The naira on Monday further declined, falling to 1,515 per dollar on the parallel market, popularly called black market.
This represents 2.97 percent (N45/$1) depreciation against
the US dollar when compared to the level of N1,470 exchanged on Friday.
The fall came despite that Nigeria’s external reserves
increased marginally by 0.4 percent week-on-week to settle at a four-week high
of $32.4 billion as of May 8, 2024.
Analysts had expected the naira to extend its depreciation
against the dollar to this week unless there is an intervention by the Central
Bank of Nigeria (CBN).
Last week, the foreign exchange (FX) witnessed persistent
weakness in the weaker than of the Naira due to shortage of dollars in the
market.
At the close of FX market on Friday, the naira fell flat by
0.45 percent as the dollar was quoted at N1,466.31, weaker than N1,459.73
closed on Thursday at the Nigerian Autonomous Foreign Exchange Market (NAFEM),
according to the market summary released by FMDQ Securities Exchange Limited.
The intraday high closed at N1,490 on Friday, weaker than
N1,465 closed on Thursday. The intraday low strengthened marginally to N1,322
per dollar as against N1,351 on Thursday.
Dollar supplied by willing buyers and willing sellers
increased by 34.84 percent to $113.78 million on Friday from $84.38 million
recorded on Thursday.
The naira on Friday fell to one month-low of 1,470 against
the dollar, on the parallel market also known as black market, following dollar
shortage and the activities of speculators. The local currency depreciated to
as low as N1,510 as of March 21, 2024 at the parallel market.
The FX market activity level waned as average turnover at
NAFEM declined by 31.0 percent week-on-week to close at $894.3 million as of
May 9, 3024, according to a report by the Afrinvest Securities Limited. “We
expect the naira to extend its decline barring any interventions,” analysts at
Afrinvest said.
The directors of the International Monetary Fund (IMF) have
advised the Central Bank of Nigeria (CBN) to adopt a well‑designed
Foreign Exchange (FX) intervention framework to ensure the stability of the
currency.
The directors welcomed the removal of foreign exchange
market distortions and encouraged the Nigerian authorities to continue
improving the functioning of the FX market.
According to the Washington D.C. based Fund, gross
international reserves declined in 2023 amid persistent capital outflow
pressures. The naira depreciated sharply after the unification of the official
foreign exchange windows in June 2023. “Following monetary policy tightening in
February and March 2024 and a resumption of FX interventions, the naira has
started to stabilize,” the IMF directors said in the concluded Article IV
consultation with Nigeria.