- The value of the naira once again depreciated against the United States dollar in the forex markets
- The new exchange rate shows that the naira in official and unofficial fore markets is now above N1,500
- The depletion of Nigeria's foreign reserves has raised concerns about the future performance of the naira
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends. (edited)
The Nigerian currency, the naira lost more value against the United States dollar in the official market and also unofficial markets.
Data from the Central Bank of Nigeria showed that the Nigerian Foreign Exchange Market (NFEM) recorded a closing rate of N1,522.78 per dollar at the end of trading on Friday, March 7.
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Friday's exchange rate is N10.23 or 0.75% 3 depreciation for the naira when compared to the previous day's closing rate of N1,512.55/$1 recorded in the previous day.
The naira fell despite reported interventions by the CBN.
According to market traders, there was a double intervention by the apex bank on Friday to ease the pressure on the naira.
The recent decline in the naira's performance on the currency market has heightened concerns about its stability, particularly as the country's foreign exchange reserves continue to drop.
Naira against pound, euro
It was the same story for the naira against the pound sterling and also the euro.
The Nigerian currency crashed against the Pound Sterling by N47.74 to sell for N1,960.28/£1 versus Thursday’s rate of N1,912.28/£1.
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Naira also tumbled against the euro, by N40.39 to quote at N1,648.94/€1, in contrast to the preceding session’s N1,608.55/€1.
Snapshot of naira rates in official market
Based on CBN published rates, here is a breakdown of the naira's performance against other foreign currencies in the NAFEM market on Friday.
- CFA – N2.49
- Yuan/renminbi – N209.63
- Danish krona – N221.06
- Euro – N1,648.94
- Yen – N10.32
- Riyal – N404.30
- South African rand – N83.15
- Swiss franc – N1,709.57
- Pounds sterling – N1,960.28
Naira to dollar black market
In the black market, traders told Legit.ng that the Nigerian currency also depreciated against the dollar on Friday.
Abudallahi, a BDC trader, said:
"We sold the dollar at N1,570/$1 on Friday and bought at N1,556. This is different from the N1,560 dollar sold on Thursday and the N1,570 it was bought."
Naira's long-standing struggles
The Nigerian naira has faced significant challenges in the last two years, marked by volatility, depreciation, and economic pressures. One of the primary issues has been the persistent foreign exchange (FX) shortages, exacerbated by declining oil revenues, Nigeria’s main foreign exchange earner.
Nigeria's central bank has struggled to maintain stability, implementing various policies, including multiple exchange rate windows and FX restrictions, but these have often led to more uncertainty.
The removal of fuel subsidy and the unification of exchange rates in 2023 caused a sharp depreciation of the naira, as market forces took greater control. This led to inflationary pressures, with food and essential goods becoming more expensive.
Speculative trading and dollar hoarding further weakened the naira, as businesses and individuals sought to protect their wealth from devaluation.
In addition, capital flight, low foreign direct investment, and weakened investor confidence have added to the naira’s woes. Despite efforts to boost local production and reduce dependence on imports, Nigeria’s import-heavy economy continues to strain FX reserves.
While recent monetary policies aim to stabilize the currency, including interest rate hikes and clampdowns on currency speculation, restoring confidence in the naira remains a significant challenge.
Bad news for naira as FX reserves hit five-month low
Legit.ng previously reported that Nigeria’s foreign exchange reserves have hit a five-month low, depleted by $138bn.
The current balance of the reserves stands at $39.440 billion, the same figure as the October 25, 2024 figure.
The development comes amid the rise in the naira’s value in the parallel segment of the FX market.
The article has been updated with additional comments by head of business desk Victor Enengedi.
Proofreading by James Ojo, copy editor at Legit.ng.
