The Nigerian currency, the naira, dropped to a four-month low of N,1621 in the official market on Tuesday, July 30, 2021, as against the N1,611 it traded on Monday, July 2024.... CLICK TO READ THE FULL NEWS HERE▶▶
The Nigerian currency has crashed for five consecutive days since Friday, July 26, 2024, when it finally crossed the N1,600 per dollar mark to trade at N1,606 and rose to N1,609, N1,611 before hitting the new low.
This development comes despite the CBN’s interventions. The Apex bank sold $148 million to 29 authorized dealers.
Analysts believe that the continuous depreciation of the naira is due to insufficient dollar supply at both ends of the foreign exchange markets.
According to data from the FMDQ Exchange, foreign exchange turnover in the official market stood at about $166.34 million on Tuesday, July 30, 2024.
Currency dealers quoted the naira at a high of N1,635 per dollar and a low of N1,546.
Dollar crashes in parallel market
Data shows that the naira’s performance in the official market contrasts with the black market, where it strengthened at N1,600 from N1,650 per dollar it traded the previous day.
Experts believe that despite insufficient FX supplies, Nigeria is not earning enough Forex to defend against the naira’s depreciation.
Justin Kolawole, an FX trader and market analyst, says that Nigeria’s FX supply is insufficient to drown importers’ massive appetite for Forex and those seeking medical treatments abroad. “What we have now is the CBN supplying Forex in trickles and that is not enough for importers who demand huge Forex.
That is why the naira crashes first in the black markets before the official window because these people turn to unofficial channels for FX,” he said.
“We know that Nigeria’s FX earnings are little due to insufficient exports. That is where CBN’s interventions are crucial. In a non-export economy such as Nigeria, there is no need to float a currency. You can devalue but not float,” Kolawole said.
