The Nigerian naira depreciated further in the official foreign exchange market on Thursday, falling to N1,600.50/$1.
This is according to data from the Central Bank of Nigeria’s (CBN) website.
This marks a slight drop from N1,599.00/$1 recorded on Wednesday, continuing a week-long trend of currency volatility ahead of the Easter holiday.
The official exchange rate earlier stood at N1,604.00/$1 on Tuesday and N1,599.00/$1 on Monday, showing consistent fluctuations amid sustained demand pressure for the U.S. dollar.
The persistent fluctuations reflect underlying challenges in FX liquidity and supply-demand mismatches, especially as market participants await more consistent inflows from oil exports, diaspora remittances, and foreign portfolio investments, some analysts have said.
Parallel market movement
In the parallel (black) market, the naira began the week trading at N1,605.00/$1 on Monday, appreciating by 0.93%.
- However, it weakened slightly to N1,618.00/$1 on Tuesday, marking a 0.80% decline.
- The downward trend continued on Wednesday as the naira further depreciated to N1,620.00/$1, a 0.12% drop.
- By Thursday, the currency rebounded, gaining 0.62% to close at N1,610.00/$1, recovering part of the earlier losses.
The naira also experienced fluctuations against the British pound and euro in the parallel market. The pound sterling saw significant volatility, ending Thursday at N2,080.00/£1, a 1.44% decline from Wednesday’s N2,050.00/£1.
- It had earlier traded at N2,075.00/£1 on Tuesday and N2,040.00/£1 on Monday.
Similarly, the euro was exchanged at N1,730.00/€1 on Thursday, a 0.29% increase from N1,735.00/€1 on Wednesday. The euro’s performance fluctuated throughout the week, from N1,705.00/€1 on Monday to N1,720.00/€1 on Tuesday, before reaching a mid-week high.
What This Means
The continued depreciation of the naira in both the official and parallel markets reflects the persistent imbalance between the demand and supply of foreign exchange in Nigeria.
- Despite recent reforms by the Central Bank of Nigeria (CBN) aimed at stabilizing the foreign exchange market, the naira remains under pressure—largely driven by speculative demand, reduced FX inflows, and lingering uncertainties among investors.
- The narrowing gap between the official rate and the parallel market rate indicates ongoing arbitrage activities and a still-volatile FX landscape, analysts say.
- Market watchers see the fluctuations in other major currencies like the pound and euro as demonstration of the broader instability affecting Nigeria’s external sector.
- For businesses and consumers, this volatility means higher import costs, rising inflationary pressures, and challenges in financial planning.
As the Easter holiday period tends to see increased demand for foreign exchange due to travel and imports, this trend may persist in the short term unless supported by improved dollar supply or firm policy interventions from the monetary authorities.
