Naira Hits N1400 Against Dollar in Parallel Market

On Wednesday, the Nigerian naira (NGN) exchanged for N1400 against the United States dollar in the parallel market. This represents a significant appreciation compared to previous rates of nearly N2000.

Market analysts attribute this surge to a combination of factors, including dwindling demand for dollars. Data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) window shows the currency closing at N1,560.57/$1 on Tuesday, representing a 0.8% appreciation compared to the previous day.

This improvement in the naira/dollar exchange rate comes after an extended period of currency depreciation. The naira’s continuous devaluation had posed a persistent challenge, with its worth steadily decreasing before President Bola Tinubu took office in May 2023. However, introducing a floating exchange rate system and related fiscal policies worsened the situation. The erosion of the currency’s value weakened purchasing power and undermined confidence in the Nigerian market.

The Central Bank of Nigeria (CBN) has implemented various monetary policies to stabilise the currency and alleviate the negative impact of the decline. Although the effectiveness of these measures is uncertain, the national currency has slightly gained.

On March 16, 2024, the naira appreciated N1,602 per dollar compared to N1,612 the previous day. Notably, the gap between official and parallel market exchange rates narrowed to almost zero, with the dollar quoted at N1,615 across markets.

Despite these fluctuations, the naira experienced a slight decline in value, losing 0.78 per cent against the dollar on Wednesday, according to the Nigerian Autonomous Foreign Exchange Market (NAFEM) data. This underscores the challenges and uncertainties facing Nigeria’s currency and economic stability amidst evolving government fiscal policies.

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