The Nigerian Naira experienced further losses against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, September 6. This marks the fourth consecutive day of depreciation for the domestic currency.
According to market data, the Naira weakened by 0.83 percent or ₦13.53 to sell for ₦1,639.41/$1 during the trading session. This represents a significant decline from the previous day’s closing price of ₦1,625.88/$1.
Depreciation Against Other Currencies
The Naira also faced pressure against other major currencies. It depreciated against the British Pound Sterling by ₦5.69 to close at ₦2,135.37/£1. Additionally, the local currency lost ₦7.14 against the Euro, ending the session at ₦1,799.82/€1.
Reduced FX Trading Activity
The value of foreign exchange trades recorded at NAFEX on Thursday declined by 9.7 percent or $19.97 million to $185.79 million. This is a significant decrease compared to the $205.76 million recorded on the previous day.
Black Market Also Sees Depreciation
The Naira’s downward trend was not limited to the official market. In the black market, the currency depreciated by N10 to close at N1,650/$1.
CBN’s Pause in Interventions
The Central Bank of Nigeria (CBN) has temporarily halted its recent interventions to stabilize the foreign exchange market. This decision comes after the CBN had previously pledged to address the supply gap and ensure market stability. The absence of CBN interventions has contributed to the Naira’s continued depreciation.
Impact on the Economy
The ongoing depreciation of the Naira has significant implications for the Nigerian economy. It can lead to higher prices for imported goods, inflation, and increased costs for businesses that rely on foreign currency. Additionally, it can put pressure on the country’s external reserves and impact the government’s ability to service its foreign debt.
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Outlook for the Naira
The future outlook for the Naira remains uncertain. While the CBN’s decision to pause interventions is likely to contribute to further depreciation, the situation could change if the bank decides to resume its market operations.
Furthermore, factors such as global economic conditions, oil prices, and the government’s economic policies will also influence the Naira’s performance. It is essential for the CBN and the government to closely monitor the foreign exchange market and take appropriate measures to stabilize the Naira and mitigate its negative impact on the economy.
