Naira May Rank as Worst Currency Globally as Pressure Mounts in Parallel Market at N1,740 Per Dollar
- The Nigerian currency, the naira, may set another record soon, this time as the worst-performing currency globally
- The naira is currently exchanged at N1,740 per dollar in the parallel segment of the foreign exchange market
- The Nigerian currency gained marginally in the official window on Friday, October 25, 2024, at N1,600 per dollar
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
At N1,740 per dollar in the parallel market, the Nigerian currency, the naira, is set for its worst days as there are indications that it is set to reverse the gains of the last few months.
Meanwhile, the naira remained stable and marginally rose in value in the official window as traders speculate that the Central Bank of Nigeria may intervene soon to curtail the pressure on the FX market.
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Naira may hit N1,750
Information from FMDQ Exchange showed that the exchange rate for the Nigerian Autonomous Foreign Exchange Market (NAFEM) dropped to N1,600 per dollar from N1,601.2 traded on Thursday, October 24, 2024, showing an appreciation of N1.2 for the local currency.
Vanguard reports that dealers expect the exchange rate to close in October around N1,750 while they speculate that it may hit N1,800 per dollar at the end of the year.
According to the report, at the end of the year, the Nigerian currency would have wiped out the gains made in March when it rose to an all-time high of N1,310, down from N1,820 in February 2024 and further down to N1,240 per dollar.
However, the trend reversed in April when the naira began to lose value again in the parallel market until last week.
The naira depreciated by 70.5% this year
Yearly, the naira depreciated in the parallel market by 70.5% to N1,705 per dollar at the close of the third quarter of trading on September 30, 2024, from N1,000 in September 2023.
Year-to-date, the naira has fallen 16.7% from N1,490 per dollar in January this year.
The Nigerian currency recorded a vast 104% yearly depreciation in the official window to N1,540.78 per dollar in September 2024 from N755.27 in September 2023.
However, yearly, the official window recorded a 9.9% decline at N1,600 per dollar last weekend from N1,455.9 per dollar in January 2024.
Cardoso blames FAAC allocations
Experts and dealers have attributed the continued depreciation of the naira to dollar supply shortages.
The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, disclosed a correlation between the period of FAAC disbursement and demand pressure on the FX market.
Cardoso said the CBN will monitor future FAAC allocations to determine their impact on the forex market.
Read also
Banks, dealers adjust exchange rates as dollar crashes in official window, FX reserves rise
The naira to set worst record in 2024
Experts believe that at the current rate, the naira may rank as the worst-performing currency globally in 2024.
The Nigerian government celebrated the rise of the naira in March this year, saying that development made it the best-performing currency globally.
In a recent report, the World Bank ranked the naira as the worst-performing currency in Africa.
Dollar inflows hit $57 billion monthly amid reserve increase
Legit.ng earlier reported that the Central Bank of Nigeria (CBN) disclosed that foreign exchange inflows into Nigeria hit $57 billion in August 2024.
Muhammad Abdullahi, CBN’s Deputy Director of Economic Policy, updated the audience on Nigeria’s forex situation in Washington, D.C.
The Central Bank of Nigeria (CBN) has disclosed that foreign exchange inflows into Nigeria hit $57 billion in August 2024. Muhammad Abdullahi, CBN’s Deputy Director of Economic Policy, updated the audience on Nigeria’s forex situation in Washington, D.C.
Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.
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