Naira Depreciates Against US Dollar
On Tuesday, the Nigerian naira experienced a significant depreciation against the United States dollar in the parallel market, the preferred venue for many Nigerians to conduct their foreign exchange transactions.
Reports indicate that the exchange rate reached N1,120 for one US dollar based on information gathered from Bureau De Change (BDC) operators.
Hopes of Naira’s Recovery Dashed
There had been recent optimism that the naira was on a path to regain its strength against the US dollar, but this positive trend appears to have been reversed.
Just the day before, on Monday, the exchange rate was N1,025, but it has now escalated to N1,120, according to BDC operators based in Lagos and Ogun states who provided this data.
Rising Demand for US Dollars
The BDC operators have pointed out a surge in the demand for US dollars in the parallel market, which is contributing to the naira’s depreciation.
The market witnessed heightened demand for the greenback, indicating the preference for foreign currency.
Depreciation of Naira at Investors and Exporters (I&E) Window
In a parallel development, at the investors and exporters (I&E) window, the naira faced depreciation against the dollar.
It depreciated by N60.89 or 7.53 percent compared to the previous day’s exchange rate, closing at N869.91 on Tuesday, down from N809.02 on Monday.
Dollar’s Exchange Rate Range
FMDQ Securities Exchange, the platform responsible for overseeing foreign exchange trading in Nigeria, reported that the US dollar’s highest rate for the day was N1,100, while its lowest intra-day price reached N700.
Backlog Clearance and Naira’s Struggle
Previously, there were reports that the Central Bank of Nigeria (CBN) had initiated efforts to clear a backlog of matured dollar obligations, amounting to over $7 billion.
This development had fueled hopes of the naira’s resurgence against the US dollar. However, the recent depreciation indicates ongoing challenges in stabilizing the exchange rate.