The foreign exchange (FX) market closed on Monday with naira losing its value against the dollar by 4.26 percent due to low dollar liquidity.
The low liquidity means low transactions by FX market dealers as a result of dollar scarcity.
The market liquidity, which represents the volume of transactions or the daily market turnover declined by 62.02 percent to $45.98 million on Monday from $121.08 million recorded on Friday, data from the FMDQ indicated.
Consequently, naira depreciated by 4.26 percent as the dollar was quoted at N774.78/$1 on Monday as against N743.07/$1 quoted on Friday at the Investors’ and Exporters’ (I&E) forex window, the data showed.
Read also: Seplat grows gas revenue to $63.7m
FX market dealers who participated at the auction on Monday maintained bids as high as N799/$1 and lower bid of N475/$1.
At the parallel market, also known as the black market, naira steadied at N895, the lowest value ever recorded in the foreign exchange market.
The Nigerian foreign exchange market continues to face challenges with the naira’s depreciation against the greenback even as the oil market continues to show buoyancy with prices rising on global supply concerns, analysts at Cowry Asset management Limited said.
According to the report, last week, the naira experienced depreciation against the US dollar at the parallel market, sliding by N14 or 1.61 percent week-on-week to N881/$1 from N867/$1.
The decline was attributed to the persistent dollar shortage and speculative activities, while manufacturers and importers continued to seek easier access and availability of dollars.
“In the coming week, we anticipate the naira to trade in a relatively calm band across the FX markets barring any market distortions that may disrupt supply,” analysts at Cowry Asset said.