Naira Loses More Value As Demand Pressure Continues, Expert Explains What Is Going On

• The value of the Nigerian currency continued its struggle both at the official and black foreign exchange markets
• The latest data shows that Naira lost more of its value against the US dollar, pound and also Euro across the FX market.
• An expert, Johnson Chukwu, has provided an explanation as to why the value of the naira continues to struggle against foreign currencies

The value of Nigerian currencies continues to depreciate against the US dollar and other foreign currencies at the forex market.

Data checks by Legit.ng show the naira at the official market, closed the trading week ending July 28, 2023, with a value of N775.76 at the investors and exporters window.

This is a 0.93% drop in value when compared with N768.60 which it exchanged for the dollar on Thursday, July 27.

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However, on a week-on-week comparison, the naira showed a very slight improvement in value by N2.06 or 0.26% when compared to the exchange rate of N777.82/$1 on Friday, July 22 last week.

Naira to dollar exchange rate at the black market

At the unofficial forex market, the naira also closed the week at a low exchanging to the dollar at N870 data from AbokiFX.

This represents a depreciation of 0.34 percent as the dollar traded at N870 on Friday compared to N867 since the beginning of the week.

Against the Pound Sterling and the Euro, the Naira closed the week at the unofficial market at the official market at N1,165/£1 and N942/€1, respectively.

Expert explains what is going on with the Naira

Meanwhile, Johnson Chukwu, the Group Chief Executive Officer of Cowry Assets Management, has provided context into what is going on.

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According to him, the depreciation of the Naira is over the lack of stability in Nigeria’s currency exchange rate system, attributing it to the fall in the value of the Nigerian currency, the naira.

Chukwu also emphasised the importance of stability in the exchange rate, as it plays a vital role in boosting people’s confidence.

He said:

"When the exchange rate experiences instability, it generates uncertainty, eroding investor confidence and potentially triggering panic.

"The crux of the matter lies in attaining a certain degree of stability in the exchange rate, as this aspect holds paramount importance for economic agents.

"The actual numerical value of the rate may not be the primary concern for many; rather, the critical factor is its ability to establish a level of stability. Without this stability, uncertainties emerge, causing a subsequent decline in confidence and even inducing panic among stakeholders."

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Exchange rate gap between official and black markets widens above N100 as CBN's convergence plan gets tougher

CBN speaks on license status of 2,698 BDCs as Naira falls again

In another report, the Central Bank of Nigeria has responded to reports that it withdrew over 2,000 Bureau de Change operators' licenses

The reports of withdrawal come amid the continued depreciation of the naira at the official and black markets

The CBN and the Bureau De Change Operators of Nigeria spoke with Legit.ng to set the records straight

Source: Legit.ng