The foreign exchange (FX) market trading ended on Friday with naira losing 1.41 percent against the dollar at the parallel market, popularly called black market.
One dollar traded at the rate of N930 on Friday, which was lower than N917 traded at the beginning of the trading week at the black market.
The continued loss in the value of the naira followed scarcity of dollars occasioned by low inflows from oil receipt, foreign capital and Diaspora remittances among others, according to analysts.
At the Investors’ and Exporters’ (I&E) forex window, naira appreciated by 4.53 percent as the dollar was quoted at N736.62 on Thursday compared with N771.59 on Wednesday and also higher than N744.97 quoted on Tuesday, data from the FMDQ indicated.
Nigeria’s Central Bank on June 14, 2023 collapsed all segments of foreign exchange markets into the I&E forex window.
“Although the exchange rate has shown some volatility (depreciated from N435/1USD in May 2023 to N763/1USD as of July 11, 2023 and N780/1USD as of July 20, 2023), stability is expected over the medium term as efforts to ramp up export proceeds intensify, alongside anticipated decline in demand of imported refined petroleum products,” Festus Adenikinju, member of the Monetary Policy Committee (MPC) said.
He said stability of the exchange rate is particularly important due to its strategic role in anchoring investor confidence and pass-through to domestic prices.
According to him, ongoing efforts to boost foreign exchange supply should therefore be strengthened as a more sustainable approach to stabilizing the foreign exchange market.
“Developments in the foreign exchange market are also important considerations for policy. The recent foreign exchange market reforms which have resulted in exchange rate convergence, would increase market transparency, and attract more foreign capital inflows,” he said.