Naira Weakens Against Dollar as Foreign Exchange Supply Shrinks

The Nigerian naira resumed its downward trend against the US dollar in the foreign exchange market on Wednesday, impacted by a significant drop in FX supply.

Data from the FMDQ Exchange indicated that the naira slightly depreciated to N1,631.17 per dollar on Wednesday, a shift from Tuesday’s rate of N1,630.35. This change reflects a marginal N0.80 loss against the dollar within a day.

In the parallel market, commonly known as the black market, the naira also declined to N1,750 per dollar from the previous day’s rate of N1,748.

The depreciation follows a 24-hour period in which the naira had briefly appreciated. However, with foreign exchange turnover plunging to $128.98 million from $242.59 million on Tuesday, the currency’s value was once again pressured.

The naira has experienced a volatile trajectory against the dollar over recent months, even as the Central Bank of Nigeria (CBN) has attempted various interventions to stabilize it. These efforts, however, have been met with mixed success, as FX supply remains inconsistent.

In a related development, the World Bank recently advised the CBN to avoid intervening in Nigeria’s FX market through direct auctions, urging the bank to allow market dynamics to influence the naira’s value.