Naira Slumps Against Dollar as Foreign Exchange Market Fluctuates

The Nigerian naira suffered a significant decline against the US dollar on both official and parallel foreign exchange markets, ending the week on a negative note. According to data from the Financial Markets Dealers Association (FMDQ), the naira depreciated to N1598.56 per dollar on Friday, down from N1593.93 exchanged on Thursday, losing N4.63 in the process.

The black market, where the naira was already under pressure, recorded its worst fall, dropping by N25 from N1620 to N1645 per dollar on Friday. This came as foreign exchange transaction turnover increased to $172.80 million on Friday, up from $155.52 million recorded on Thursday, according to FMDQ data.

On a week-on-week basis, the naira lost N28.48 per dollar, compared to the N1570.14 it exchanged last Friday at the official market. At the parallel market, the naira dropped by N30 compared to the N1615 per dollar exchange rate at the end of last week.

The persistent fluctuations in Nigeria’s FX market are attributed to the Central Bank of Nigeria’s (CBN) Retail Dutch Auction System, which was reintroduced to stabilize the increase in FX demand. Despite efforts to manage the market, the naira’s value continues to be affected by supply and demand imbalances.

As the FX market remains volatile, it remains to be seen how the CBN will address the issue and restore stability to the market.