Naira Finally Recovers Against Dollar as Traders Quote New Rates in Official Window
- The naira finally rebounded against the US dollar, gaining 1.17% in the official window on Thursday, October 21, 2024
- The naira’s rebound came after several days of depreciation against the dollar in all segments of the foreign exchange markets
- The naira closed trading on Thursday at N1,658 per dollar from N1,678.92 recorded on Wednesday, November 20, 2024
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency, the naira, bounced back on Thursday, November 21, 2024, after days of depreciation in the official and parallel windows.
The naira gained 1.71% to close at N1,658.67 per dollar from N1,678.92 recorded on Wednesday, November 20, 2024.
Source: Getty Images
Naira gains, but spot rates remain very low
The naira’s recovery comes after several days of depreciation, in which it hit its lowest value against the dollar at N1,689 per dollar on Monday, November 18, 2024.
Meanwhile, data from the FMDQ Exchange showed that willing sellers and willing buyers quoted the dollar at a high of N1,707 per dollar and a low of N1,631.
Foreign exchange turnover in the official window remained low at $163.66 million from the $173.29 million recorded the previous day.
Reports say the naira will depreciate further
Analysts believe that the yawning gap in the spot rate shows the trajectory of the local currency.
Several predictions have said the naira would hit its lowest at N2,000 per dollar before December 2024.
They say high demand for foreign exchange during Christmas will worsen the naira’s depreciation.
This is according to a project by Meristem Securities Limited in the Inflation Report released on Tuesday, November 19, 2024.
In the report, Meristem worried that the forex demand during Christmas would exacerbate the naira’s woes before the inflation rate.
The Nigerian currency has been in a freefall recently, hitting its lowest on Monday, November 18, 2024, when it exchanged for N1690.32 per dollar.
According to the report, food prices are expected to rise further in the near term due to increased transportation costs and consumer demand ahead of the festive season.
Analysts fault the naira devaluation
The report disclosed that further upward pressure on the core index will be caused by rising transportation from elevated fuel prices.
Emeka Okoroanywu, financial analyst and senior business editor at the Nigeria Xpress newspaper, said that the naira volatility is intended to keep the local currency.
He said that is why the Central Bank of Nigeria (CBN) rarely defends the naira.
“It is a deliberate policy to keep the currency low, but it is ineffective because the whole purpose of devaluation is to attract foreign direct investment (FDI). Instead, the devaluation is counterproductive as many companies leave, citing the naira depreciation.
Yes, the country has more money to share regarding FAAC allocations, but what can it afford regarding real market value? The purpose is defeated because Nigeria is still highly dependent on imports rather than exports,” he said.
Naira’s value against the dollar changes
Legit.ng earlier reported that the value of the Nigerian currency, the naira, fell again on Wednesday, November 20, 2024, after a brief rebound on Tuesday, November 19, 2024.
The naira crashed against the dollar in the official window to close at N1,687.52, down from the N1,678.93 per dollar it traded the previous day.
Wednesday’s crash was one of many instances in which the naira depreciated against the dollar amid the Central Bank of Nigeria's (CBN) intervention drought.
Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.
Source: Legit.ng
