• Wednesday, May 29, 2024
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BusinessDay

Naira exchanges flat as dollar scarcity bites at parallel market

Naira abuse, mutilation and production of counterfeit

The naira on Friday exchanged flat at 1, 380 as dollar scarcity bites at the parallel market, also known as black market.

Some traders sold one dollar at the rate of N1,410 and N1,280 in various areas across the country on Friday, amid increased demand. “Demand is very high and the dollar scarce in the market,” one trader told BusinessDay on Friday.

The trader said the demand was coming from individuals who need dollars for business or personal travels, as well as importers.

The naira also closed flat at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as the dollar was quoted at N1,402.67 on Thursday compared to N1,390.96 closed on Tuesday before the workers’ holiday, data from the FMDQ Securities Exchange Limited, indicated.

The NAFEM window witnessed notable shifts in currency values. On Thursday, the intraday high closed at N1,445, reflecting a slight decline from Tuesday’s figure of N1,450. Meanwhile, the intraday low experienced a more significant drop, falling from N1,200 on Tuesday to N1,299 on Thursday.

The pressure on the naira has persisted despite various measures put in place by the Central Bank of Nigeria (CBN) to boost liquidity in the foreign exchange (FX) market.

April saw the naira emerge as the best-performing currency globally, supported by bullish sentiment from leading international investment institutions.

“Our FX market is experiencing robust activities, with turnover reaching levels not seen in over seven years. This liquidity boost instils confidence among investors, businesses, and other partners, ensuring fluidity in their interactions with Nigeria’s FX markets,” Olayemi Cardoso, governor of the CBN said last month.

According to Muda Yusuf, CEO of the Promotion of Private Enterprise, “it might even be that we cannot afford to leave the currency floating, especially given the imperfections that we have in the economy.”

The dollar index, a measure of the greenback’s performance against six major currencies, recorded a notable decline, hitting its lowest level since April 11 at approximately 105.2 index points. This downward trend marks a 1% decrease over the week, indicating the potential for the dollar to experience its most substantial weekly loss in nearly two months.