Naira Depreciates Further as Forex Market Turnover Drops by 25%
The Naira faces renewed depreciation with forex market turnover dropping 25%. Learn about the economic factors driving the decline.
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The Naira is facing renewed depreciation pressures as market turnover falls by 25% amidst widening supply gaps and increasing demand. Yesterday, the Naira weakened to N1,635 per dollar in the parallel market, down from N1,625 last weekend. Meanwhile, the Nigerian Autonomous Foreign Exchange Market (NAFEM) rate also dropped to N1,585.77 per dollar from N1,598.56.
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The gap between the parallel market rate and the NAFEM rate widened significantly, indicating increased market volatility. According to market dealers, the renewed pressure is due to a decline in dollar supply in the official market, mirroring the fall in NAFEM turnover to $71.18 million, a 58.8% decrease from the previous $172.8 million.
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Additionally, Nigeria's foreign reserves fell by $490 million, a 1.3% decrease month-on-month, as the Central Bank of Nigeria (CBN) intervened in the FX market to stabilize the currency. Analysts predict further depreciation due to high demand for Personal Travel Allowances (PTAs) and Business Travel Allowances (BTAs) without significant inflow to boost FX supply.
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