Naira Plummeting Against Dollar Triggering Concerns in Nigeria

The Nigerian naira continues to weaken against the USD at the foreign exchange market, sparking alarms in the country’s economic landscape. Reports reveal that the foreign exchange transaction turnover drooped by a staggering 54 percent to $92 million on Thursday compared to the previous day’s $201 million.

FMDQ data indicates a marginal decline of N3.95 on Thursday, with the naira weakening to N1,586.04 per dollar from N1,582.09 on Wednesday. This development parallels a similar decline at the parallel market, where the naira edged closer to the N1600 per dollar milestone on Thursday, a significant contraction from the N1598 mark noted on the previous day.

This two-game streak of naira weakenings is attributed to the Central Bank of Nigeria’s retail Dutch Auction System’s latest retail auction. Furthermore, international reserve data reveals a remarkable dip in Nigeria’s external reserves, touching a low of $36.62 billion as of August 12, from August 7’s recorded figure of $36.87 billion.

The persistent slides of the naira against its major trading partner, the U.S. dollar, are causing commotion among economists and financial scholars in Nigeria. As the country contemplates the implications of this economic jolt, the nation’s banking industry is expected to be replete with questions about reserve adequacy and potential interest-rate hikes.

The Central Bank stands firm in its resolve to maintain internal economic stability, even as worries rise about the country’s capacity for sustaining its economy in line with the global financial trends