Traders Sell Dollar at New Rates in Official, Parallel Markets as Naira Hits Lowest in May
- The naira reversed its gains on Thursday, May 16, 2024, to trade at N1,533.99 per dollar from the previous rate of N1,459.02
- The depreciation represents a whopping 4.69% in 24 hours compared to the rate of the previous day
- The naira also depreciated to N1,540 to a dollar in the parallel market from the N1,490 recorded the day before
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
The exchange rate between the naira and dollar in the official Nigerian Autonomous Foreign Exchange Market (NAFEM) depreciated to N1,533.99 per dollar on Thursday, May 26, 2024.
The depreciation represents a 4.69% decline in 24 hours compared to the N1,459.02 per dollar recorded the day before.
Source: Getty Images
Naira reverses gain one day after
The naira recovered on Wednesday after a one-week losing streak, closing stronger at N1,459.09 per dollar on Wednesday, May 15, 2024.
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Traders quoted the dollar at an intra-day high of N1,590 per dollar and a low of N1,399.20 amid a surge in dollar demand.
According to data from the FMDQ Exchange, Forex turnover at NAFEM surged by 124.56% to reach $289.14 million on Wednesday, May 15, 2024.
However, on Thursday, May 16, 2024, the market turnover dropped marginally 5.63 to $272.86 million.
On Thursday, May 16, 2024, the naira fell in the parallel market to trade at N1,540 per dollar from the N1,530 recorded on Wednesday, May 15, 2024.
Gap between official and black market narrows
According to reports, the margin between the parallel market and NAFEM rates narrowed to N6.01 per dollar from N70.98 on Wednesday, May 15, 2024.
Analysts believe the decline in forex liquidity in the official market may have contributed to the naira’s depreciation.
Maurice Ibeh, a financial analyst and Forex trader, said Nigerians' high demand for dollars is due to increased demand from importers and medical tourists.
“What we have now is that high demand is due to people asking for forex for medicals abroad and importers looking to get quick forex amid frequent changes in Customs Exchange rate by CBN.”
“Importers are constantly on edge when opening Form M as the CBN can adjust the rate any moment,” Ibeh said.
CBN licenses new IMTOs
The development comes amid the Central Bank of Nigeria (CBN) plans to boost foreign exchange remittance to Nigeria.
The apex bank recently approved 14 new International Money Transfer Operators (IMTOs) for forex remittance.
The CBN said it hopes to double diaspora remittances after they declined by $282 million in the first quarter of 2024.
Standard Bank predicts new exchange rate
Legit.ng earlier reported that a report by Standard Bank predicted that the Nigerian foreign exchange market would experience a significant influx of capital in the second half of the year.
The report predicted $5.1 billion in funding inflows into the Nigerian economy in the second quarter of this year.
The banking group forecast a foreign inflow of $5.5 billion into Nigeria from Eurobond sales and the NNPC crude payment facility from Afreximbank.
Proofread by Kola Muhammed, a journalist and copyeditor at Legit.ng
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