The foreign exchange (FX) market opened on Thursday with naira depreciating to an all-time low of N1,040 on the black market, also known as parallel market.
This represents 0.97 percent weaker than N1,030/$ closed on Wednesday at the same market.
At the Investor’ and Exporters’ (I&E) forex window, the naira depreciated by 1.43 percent as the dollar was quoted at N776.80 on Wednesday compared to N765.83/$1 quoted on Tuesday. It was weaker than N773.54$1 exchange on Monday,and N741.85 on Friday, data from the FMDQ indicated.
Nigeria’s foreign exchange market market continues to experience pressure, despite rates unification in June 14, 2023 by the Central Bank of Nigeria (CBN).
Despite the exchange rate unification, FX inflows into Nigeria are lagging, a report by FSDH Research stated.
On the other hand, the demand for foreign currency remains high thereby creating pressure on the exchange rate. In addition, limited access to FX in the official market (delays, backlogs, documentation requirements) are incentivizing players to purchase FX in the black market.
“On a positive note, the government removed the peg on the official exchange rate in June 2023. This suggests some level of commitment to exchange rate reforms. The President is also at the forefront of wooing investors with the Nigeria-India Business Summit as an example.
“To win back investor’s confidence, we believe that the government must intensify its efforts in curtailing oil theft in the short term and provide a clear roadmap to improve FX inflows and management in the medium to long term to assure top institutional investors. In the immediate term, we expect the Naira to continue to face pressure in the official market,” analysts at FSDH Research said.