Naira Declines Against Dollar, Exchanges at N1,548/$1 on Parallel Market
The Nigerian naira continued its downward trend on Monday, trading at N1,548 per dollar in the parallel market amid persistent pressure on the foreign exchange (FX) market.......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
Market survey shows that demand for the United States dollar has remained elevated while supply has continued to lag.
The naira closed at N1,533.57 per dollar at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) window as the gap between the official and parallel market rates continues to increase.
Traders attributed the latest decline to sustained demand for foreign exchange by importers, manufacturers, and individuals, coupled with limited FX liquidity across commercial banks and Bureau De Change operators.
The naira has continued to react to supply-side challenges with foreign portfolio inflows remaining below expectations.
Analysts note that the scarcity of dollars in the formal market is driving businesses and individuals to the parallel market, further weakening the naira’s position.
Foreign exchange inflows from crude oil sales and other sources have yet to significantly improve liquidity in the official window.
Meanwhile, operators report that the parallel market has remained the main source of FX for many small and medium-scale enterprises and importers unable to access official allocations.
The Central Bank of Nigeria (CBN) has continued its intervention efforts to stabilize the market, including adjustments to its monetary policy stance and initiatives aimed at attracting foreign investment.
However, market analysts indicate that without a significant improvement in FX supply, pressure on the naira will likely persist.
In recent weeks, inflationary pressure has also intensified, driven by higher import costs associated with the depreciating naira. Businesses reliant on imported inputs are adjusting prices upward, contributing to inflation and further impacting consumer purchasing power.
With no immediate relief in sight, market participants are closely monitoring developments around FX reforms, potential external inflows, and fiscal policy actions that could support market stabilization in the coming weeks.