Naira hits one-month low of 1,470 on black market

The naira on Friday fell to one month-low of 1,470 against the dollar, on the parallel market also known as black market, following dollar shortage and the activities of speculators.

The local currency depreciated to as low as N1,510 as of March 21, 2024 at the parallel market. On a daily trading basis, the naira weakened by 2.04 percent from N1,440 per dollar quoted on Thursday.

One of the street traders at CMS, Lagos Island, told BusinessDay that the dollar is very scarce and demand, also very high on the black market.

The naira closed weaker as the dollar was quoted at N1,459.73 on Thursday compared to N1,421.06 quoted on Wednesday, at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data released by the FMDQ Securities Exchange Limited.

Bismarck Rewane, managing director/chief executive officer of Financial Derivatives Company Limited, emphasized the urgent need for a revival of the Naira. During his presentation at the Lagos Business School in May 2024, Rewane highlighted the necessity for swift measures to bolster the currency, advocating for the infusion of fresh funds through Eurobonds and Diaspora flows, with proposed targets ranging from $19 to $25 billion.

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Explaining the persistent pressure on the Naira, Rewane attributed it to Nigeria’s external imbalances, stemming from disruptions in oil production, declining oil prices, and speculative activities in the market. He pointed out factors such as a negative trade balance equivalent to 0.86 percent of GDP, which has intensified pressure on the Nigerian currency market.

Additionally, Rewane noted that regulatory arbitrage has further exacerbated the situation, complicating efforts to stabilize the Naira.

He noted that the naira was was overvalued before the FX reform that took place in June 2023, adding that undervaluation occurred between July 2023 and December 2023, and since January 2024, the naira has become overvalued.

“The naira has a checkered history, witnessing profound disruption over the past three decades. It remains a non-convertible currency, its exchange rate influenced by economics, politics, and policy,” said Rewane.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.