Dollar Drought: Naira Sees Sharp Decline, Closes at N956/$

The Nigerian naira experienced a significant downturn on Thursday, reaching N956/$ on the official Investor and Exporter forex window. This plunge, representing a 13.78% decrease from the previous day’s close at N840.53/$, is attributed to a substantial 46.77% decline in dollar supply.

According to data from the FMDQ Securities Exchange, the forex market witnessed a notable reduction in the turnover of traded dollars, plummeting from $198.21 million on Wednesday to $105.50 million on Thursday. The day’s trading saw the naira fluctuate between N800.90/$ and highs of N1136/$ and N615/$ before settling at N956.33/$ at the close.

Despite recent efforts by the Central Bank to address the backlog of foreign exchange forward contracts, the naira remains in a state of instability. Reports reveal that the naira has lost approximately 40% of its value since June, positioning it as one of the worst-performing currencies globally, as disclosed by the World Bank.

In a recent assessment, the Economic Intelligence Unit, the research and analysis division of the Economist Group, expressed concerns about the Central Bank’s ability to effectively clear the backlog of foreign exchange orders. The report stated, “An unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders.” This challenging scenario is expected to persist, keeping foreign investors on edge and leading to periodic devaluations amidst high inflation and continued disparities with the parallel market.