Naira falls further as dollar sales drop by 30.05%

The naira on Thursday weakened further at the official foreign exchange (FX) market, following a drop in dollar sales by market players.

After trading on Thursday, the naira lost 10.45 percent of its value as the dollar was quoted at N1,484.75, weaker than N1,329.65 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ Securities Exchange Limited.

Read also: Naira returns to loss at official market despite dollar sales

Dollar supply by willing sellers and willing buyers declined by 30.05 percent to $235.41 million on Thursday from $336.54 million recorded on Wednesday.

The summery of the FX auction revealed that the intraday high closed weaker at N1,520 per dollar on Thursday compared to N1,506/$1 quoted on Wednesday. The intraday low also depreciated to N1,100 on Thursday, weaker than N1,010 exchanged on Wednesday.

At the parallel market, also known as black market, the Naira closed unchanged at N1,480 on Thursday.

The local currency has continued to depreciate in the FX market despite policies and interventions by the Central Bank of Nigeria (CBN).

Nigeria’s external reserves, which gives the CBN the firepower to defend the naira, declined by 7.21 percent in one year, dropping to $32.763 billion in May 22, 2024 compared to $35.31 billion as of April 20, 2023.

The pressure on external reserves arises from several factors such as high demand for foreign currency to meet goods imports and service payments, limited investment inflows due to weak confidence, and limited inflows from crude oil sales due to oil theft.