Again, Naira Crosses New Threshold in Official Market as Gap with Parallel Market Widens
- The naira depreciated in the official market on Wednesday, June 3, 2024, at N1,512 per dollar as against the N1,505 it traded the day before
- The naira also depreciated in the parallel market at N1,520 per dollar as against the N1,515 recorded the previous day
- Analysts blamed CBN’s apathy to BDCs as a reason for the naira’s fall as it emerged as the worst currency in 2024
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
The Nigerian currency, the naira, crossed the N1,500 per dollar mark in the official and parallel markets on Wednesday, June 3, 2024.
The naira traded at about N1,512 per dollar in the official market on Wednesday, June 3, 2024, as against the N1,508 it traded the day before.
Source: Getty Images
Naira’s spot rate hits highest at NAFEM
Currency dealers in the official market quoted the spot rate at a high of N1,535 per dollar and a low of N1,445.
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Data from the FMDQ Exchange shows that the official forex turnover stood at $114.91 million, declining by 98.98.4%.
Meanwhile, in the parallel market, also known as black, the Nigerian currency depreciated to N1,520 per dollar on Wednesday, June 3, 2024, as against the N1,515 per dollar it traded the day before.
According to reports, the gap between the official and parallel markets grew by N7.39 per dollar, compared to the N5.55 recorded the day before.
Low FX turnover causes naira’s crash
Analysts believe that low FX turnover and low productivity are to blame for the naira's crash above the N1,500 threshold.
Jonathan Ibeh, a currency dealer in Lagos, said the naira will continue to depreciate until the Central Bank of Nigeria resumes its weekly FX intervention to BDCs.
He disclosed that the BDCs are an integral part of the forex market system and should not be told to source for FX in the open market as that would put enormous pressure on the naira.
“The naira’s fall is not magic. Some processes led to its depreciation. Everyone saw the impact of CBN’s FX interventions in the parallel market in March and April. The naira became the world’s best performer and appreciated by nearly N1,000 per dollar.
“We do not know why the CBN stopped selling dollars to us, but the effect of halting the FX sale will be catastrophic on the naira,” he said.
The naira becomes the world’s worst currency
Legit.ng earlier reported that the naira emerged as the worst currency in the world in the first half of 2024.
A report by Bloomberg on Friday, June 28, 2024, said devaluation, insufficient dollar liquidity, and market volatility have halted the Central Bank of Nigeria (CBN) 's efforts to boost the Nigerian currency.
Apart from the naira, Egypt’s pound and Ghana’s cedi were rated as the worst performers in the year's first six months.
The Bloomberg report tracked data from FMDQ and disclosed that the naira depreciated for nine days to N1.510 per dollar by the close of business on Thursday, June 27, 2024.
The naira depreciation came amid promises by the CBN governor that the worst of the currency's volatility was over.
Olayemi Cardoso, the CBN boss, disclosed that the naira would experience an improvement in performance against the US dollar in the weeks ahead.
CBN abandons Price Verification Portal
Legit.ng previously reported that the Central Bank of Nigeria (CBN) announced on Wednesday, June 26, 2024, that it will stop its Price Verification System (PVS) Portal beginning July 1, 2024. The decision comes amid recent developments in the Nigerian foreign exchange market.
The decision comes amid recent developments in the Nigerian foreign exchange market.
The apex bank announced in a circular issued by W.J. Kanya, the acting director of the trade and exchange department, citing a previous circular dated August 17, 2023.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
