In a concerning turn of events, the Nigerian Naira tumbled to an unprecedented low of N980 per US dollar in the parallel market, commonly referred to as the black market, this Wednesday. The currency’s depreciation is primarily attributed to a surge in demand for dollars, driven by various factors such as business trips, educational expenses, medical needs, and tourism.
The official foreign exchange market, the Investors’ and Exporters’ (I&E) forex window, also witnessed a decline, with the Naira slipping by 0.34 percent. On Tuesday, the dollar was quoted at N776.60, compared to N773.98/$1 on the previous day, according to data from the FMDQ.
The year-to-date figures paint a grim picture, showing a staggering 68.46 percent depreciation of the Naira, sliding from N461/$1 at the beginning of the year to its current value of N776.60/$1.
Market dynamics saw willing buyers and sellers maintaining bids between N799.90/$1 at the high end and N720.00/$1 at the low end. The daily foreign exchange market turnover settled at $71.01 million on Tuesday.
Shifting attention to the money market, the secondary market for Nigerian treasury bills had a mildly negative day, with the average yield across the curve inching up by just 1 basis point, reaching 7.17 percent, up from 7.16 percent the previous day, as reported by FSDH Research. While the long-term maturities recorded a more significant increase of 9 bps, the short-term and medium-term maturities remained relatively stable at 3.05 percent and 6.16 percent, respectively. Notably, the treasury bill maturing on July 11, 2024, experienced selling pressure, contributing to the overall market fluctuations.
These developments in the foreign exchange and money markets raise concerns about the economic stability of Nigeria, prompting both investors and policymakers to closely monitor the situation. The depreciating Naira and its impact on the broader economy remain subjects of significant interest and debate among financial experts and the general public.