Dollar Gain Over Naira, N1,520/$ at The Parallel Market

In the latest development on the Nigerian foreign exchange market, the Naira has faced a significant drop against the US Dollar, trading at N1,520/$ in the parallel market. This sharp decline marks a critical point in the currency’s valuation, reflecting the ongoing economic challenges the country is grappling with.

The recent depreciation of the Naira against the Dollar is a continuation of a trend observed over the past few weeks. Notably, the official and parallel markets have been moving closer to convergence, indicating a broader trend of devaluation across the board. The gap between the official and black market rates has narrowed to just N3, highlighting the increased pressure on the Naira.

This devaluation is primarily attributed to the Central Bank of Nigeria (CBN) not selling forex to Bureau de Change (BDC) operators in the last three weeks. The absence of these interventions has left the local currency vulnerable to fluctuations, leading to its depreciation in the parallel segment of the FX market. On May 10, 2024, the Naira dropped in value to N1,479 per dollar in the parallel market, a 1.38% depreciation from the N1,450 recorded on May 9, 2024.

Despite the challenges, there have been some positive developments. The Nigerian currency saw a rebound in the parallel market in April, where it was trading at N1,100 per dollar. This rebound was attributed to the anticipation of another round of FX sales by the Central Bank of Nigeria (CBN). However, this recovery seems to be short-lived as the Naira continues to face significant devaluation pressures.

The recent depreciation is a stark reminder of the volatility of the Nigerian foreign exchange market. It underscores the need for effective policy measures to stabilize the Naira and bolster the economy.