Naira Sinks to N1,700 Per Dollar at Black Market, Hits 7-Month Low Amid Continued Depreciation
- The Nigerian currency, the naira, has depreciated against the US dollar after several days of solid performance
- The drop occurs despite the CBN's decision to adopt a retail auction approach to help ease the pressure on the naira
- At the Investor's and Exporter's (I&E) window, the naira traded between N1,530 and N1,691 against the dollar
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the Stock Market.
On Friday, September 27, 2024, the naira fell to N1,700 per dollar in the parallel segment of the foreign exchange (FX) market.
By the close of trading, this marked a decline of 1.49% from the N1,675/$ rate observed on Thursday.
Source: UGC
This N1,700 rate represents the naira's lowest value since February 19, when it dropped to N1,730/$.
Naira continues to decline
The decline happened despite the Central Bank of Nigeria’s (CBN) sale of foreign exchange to authorized dealer banks last week through the Retail Dutch Auction System (rDAS).
In Lagos, currency traders, often called street traders, quoted the naira's buying rate at N1,680/$ and the selling rate at N1,700/$, resulting in a profit margin of N20.
At the official exchange window, the naira gained 2.24%, appreciating from N1,576.1/$ on Thursday to N1,540.78 on Friday.
As reported by FMDQ Exchange, which manages the official market, the dollar was traded at a high of N1,691 and a low of N1,530 during trading hours.
Naira's performance during the week
On Monday, the naira weakened in the parallel market, dropping to N1,665/$ from N1,663 on September 20.
The currency declined, reaching N1,670 on Tuesday and N1,680 on Wednesday. However, it recovered slightly to N1,675 on Thursday.
In the official FX market, the naira depreciated to N1,562.66 on Monday, down from N1,541.52 on September 20.
It continued to fall to N1,658.48 on Tuesday and N1,667.72 on Wednesday before appreciating to N1,576.1 on Thursday.
At the Investor's and Exporter's (I&E) window, the naira traded between N1,530 and N1,691 against the dollar.
During the week, the CBN announced plans to sell $20,000 in foreign exchange to eligible Bureau De Change operators nationwide at the rate of N1,590/$.
On Friday, the total daily turnover decreased to $212.31 million, compared to $334.05 million recorded on Thursday.
Speaking on the recent naira crash, Uzo Nwachukwu, a forex trader, told Legit.ng that the factors working against the naira still persist.
He said:
"The recent decline of the naira against the US dollar reflects deepening economic challenges in Nigeria, driven by inflation, limited foreign reserves, and policy uncertainty. This has increased the cost of living and importation, adding pressure on businesses and consumers. Urgent reforms are needed to stabilize the currency and restore confidence."
CBN identifies forces behind naira's crash
Meanwhile, Legit.ng reported earlier that the CBN hinted that the monthly disbursements from the Federation Account Allocation Committee (FAAC) to states are one reason for the naira's poor performance.
According to the CBN governor, Yemi Cardoso, there is a correlation between the disbursements and the poor performance of the Nigerian currency.
He further revealed plans by the CBN to monitor disbursement by the FAAC to determine its impact on prices.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
