Naira on Thursday depreciated against the dollar following strong demand from importers and travellers amid scarcity of the greenback at the parallel market, traders said.
Dollar was being traded at the rate of N762 on Thursday, this represents 0.26 percent lower than N760/$ traded on Tuesday at the unofficial market.
At the Investors and Exporters (I&E) forex window, Nigeria’s official market, naira appreciated by 0.23 percent as the dollar was quoted at N463.33 on Wednesday as against the last close of N464.42 on Tuesday.
Most foreign exchange dealers who participated at the market auction on Wednesday maintained bids between N460.00 (low) and N632.00 (high) per dollar.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), which met in Abuja on Tuesday and Wednesday, observed that the economy continued to be weighed down by high import bills, leading to pressure on foreign exchange and resultant increase in the general price level.
The Committee noted that the economy needs to build up the stock of foreign reserves to act as buffers against shocks.
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Naira, Nigeria’s currency, has depreciated by 57.26 percent against the dollar at the official foreign exchange market, highest ever since the eight year of President Muhammadu Buhari’s administration.
At the Central Bank of Nigeria (CBN) official window, the naira has weakened by N264 (57.26%) to N461 per dollar as of May 23, 2023 from N197/$ in 2015 when Buhari assumed office.
At the parallel market, naira has depreciated by 38.97 percent to N762 per dollar as of Thursday, May 25, 2023 compared to N465/$ in 2016.
Aisha Ahmad, CBN’s deputy governor in charge of financial system stability, said the reported impact of exchange rate pressure on domestic price levels reinforces the relevance of foreign exchange (FX) policies of the Central Bank such as the non-oil FX Rebate Scheme, Race to US$200 billion in FX repatriation, Naira4-dollar and other policies targeted at attracting diaspora remittances, improving liquidity in the FX market, and strengthening accretion to the external reserves.
As of March 16, 2023, she said the external reserves position stood at US$35.35 billion which can finance 6.02 months of import of goods and services or 8.54 months of import of goods only.
“With persisting global headwinds, lingering macroeconomic uncertainties, and FX demand pressures, ensuring exchange rate stability remains a key challenge for monetary policy,” she said.
Nigeria’s foreign exchange reserves have declined to $35.18 billion as of May 23, 2023, data from the CBN’s website showed.