Naira Declines in Forex: Surge in Dollar Demand Causes Market Fluctuations

On Wednesday, Naira depreciated against the dollar both at the official and parallel market in the foreign exchange (FX) market. The devaluation was a result of the high demand for the dollar.

The naira declined by 1.07% with the dollar trading for N940 on Wednesday. On Friday last week, the naira traded against the dollar for N930 at the parallel market (black market).

On Wednesday, traders stated that the rate at which the dollar is being demanded is high as individuals and importers are buying the dollar for school fees, business travel, medical, and tourism.

Also, the data from the FMDQ stated that Nigeria's official FX market and the Investors and Exporters (I&E) window dropped by 2.16% as the dollar was N758.12 on Wednesday compared to the record of Tuesday, which showed that the dollar was N742.10.

The FMDQ shows that on Tuesday this week, the turnover of the daily FX market saw an increase of 11.62% to $42.26 million compared with Monday Records shows that $37.86 million was recorded on Monday.

The FX market auction on Tuesday shows that the bidding was still high at N807.15 among willing sellers and buyers, which include banks, the Central Bank of Nigeria (CBN) exporters, and investors. 

It saw an increase of N804.15 per dollar, which was recorded on Monday, and a low bid of N738 per dollar, which was weaker than N722.39 per dollar on Monday.