The Nigerian naira has resumed its depreciation against the United States dollar, recording significant losses at both the official and black market foreign exchange (FX) platforms on Wednesday.
Data from the FMDQ Securities Exchange reveals that the naira weakened further to ₦1,687.52 per dollar at the official FX market, down from ₦1,678.93 per dollar traded on Tuesday.
This decline represents a loss of ₦8.59 in just one day, signaling continued challenges for Nigeria’s currency amidst ongoing economic uncertainties.
Similarly, in the parallel or black market, the naira exchanged for ₦1,750 per dollar on Wednesday, reflecting a ₦10 drop from the ₦1,740 rate recorded the previous day.
The sustained weakness in the naira is a source of concern for businesses, investors, and citizens, as it exacerbates inflationary pressures and increases the cost of imported goods and services.
The depreciation occurred despite a rise in FX transaction turnover, which climbed significantly to $173.29 million on Wednesday compared to $128.59 million on Tuesday.
This 34.7% increase in trading volume indicates a higher demand for foreign exchange, which may have contributed to the naira’s weaker performance.
Market analysts believe the persistent volatility of the naira stems from a variety of factors, including high demand for foreign exchange, speculative trading activities, and limited supply of dollars in the economy.
The widening gap between the official exchange rate and the black market rate further underscores the inefficiencies in Nigeria’s FX management system, raising concerns about the Central Bank of Nigeria’s (CBN) intervention strategies.
Over the past several months, the naira has been on a fluctuating trajectory against the dollar, despite various policy measures and interventions implemented by the CBN.
These measures, aimed at stabilizing the currency, include adjustments to interest rates, efforts to attract foreign investments, and targeted funding for critical sectors of the economy.
However, the results have been mixed, with the naira continuing to face significant headwinds.
The challenges with the naira’s value reflect broader economic issues, such as dwindling foreign reserves, heavy reliance on oil exports, and subdued revenue generation from non-oil sectors.
Experts are urging the government to adopt more holistic and sustainable economic reforms to address structural problems and restore confidence in the naira.The current depreciation trend highlights the urgent need for coordinated policy responses to stabilize the FX market, manage inflation, and ensure long-term economic stability in Nigeria.
