The naira has weakened to a two-month low of N1,520.40 against the US dollar at the official foreign exchange (FX) market, following a shortage of dollars in the market on Tuesday.
This represents a depreciation of 2.78 per cent compared with the level of N1,478.11 exchanged on the previous day at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the FX market summary released by FMDQ Securities Exchange Limited.
On March 15, 2024, the naira depreciated as the dollar was quoted at N1,602.75 at NAFEM.
Dollars supplied by willing buyers and willing sellers declined by 40.84 per cent to $128.76 million on Tuesday from $217.64 million recorded on Monday.
During the FX trading on Tuesday, the intraday high fell to N1,568 per dollar, weaker than N1,515/$1 quoted on Monday. Also, the intraday low depreciated to N1,350 on Tuesday from N1,301 on Monday.
The Nigerian naira faced another day of decline in the FX market on Tuesday, reaching a new low of 1,530 against the dollar on the parallel market, commonly referred to as the black market.
This latest figure reflected a depreciation of 0.98 per cent, equivalent to N15 per dollar, compared to Monday’s rate of N1,515 on the black market.
The recent downturn in the naira’s value followed a period of gains in April 2024 and is primarily attributed to a scarcity of dollars caused by the repatriation of funds by foreign portfolio investors (FPIs).
Bismarck Rewane, managing director/chief executive officer of Financial Derivatives Company Limited, noted that regulatory arbitrage has further exacerbated the situation, complicating efforts to stabilise the Naira.
He noted that the naira 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, in his latest presentation at the Lagos Business School in May 2024.
