In a dramatic turn of events, the Naira has significantly depreciated against the Dollar, falling to N1,655 per dollar in the parallel market on Thursday. This marks a notable decline from the N1,645 per dollar rate recorded on Wednesday.
The official exchange rate for the Nigerian Autonomous Foreign Exchange Market (NAFEM) also saw a steep drop. The Naira weakened to N1,649.76 per dollar from N1,558.75 per dollar on Wednesday. This represents a substantial depreciation of N91.01.
The sudden decline comes just 24 hours after the Presidency celebrated a significant gain in the Naira’s value. On Wednesday, Bayo Onanuga, a media aide to President Bola Ahmed Tinubu, highlighted the Naira’s improvement, which had reached N1,558 per dollar, its strongest position against the Dollar since August 21.
Onanuga’s praise for the Naira’s performance was based on recent financial developments, including the government’s successful domestic sale of $900 million in Dollar-denominated bonds. This sale was viewed as a positive move for the economy and contributed to the temporary strengthening of the Naira.
The recent drop in the Naira’s value contrasts sharply with the previous day’s gains. Data from the FMDQ Securities Exchange revealed that the indicative exchange rate for NAFEM surged from N1,558.75 per dollar on Wednesday to N1,649.76 per dollar on Thursday.
This indicates a depreciation of N91.01 for the Naira within a single day. In the parallel market, the Naira fell by N5 to N1,655 per dollar from N1,650 the previous day. This decrease has narrowed the gap between the parallel market rate and the NAFEM rate to just N5.24 per dollar, compared to N86.25 per dollar on Wednesday.
The timing of the Naira’s depreciation is noteworthy, coming just after President Tinubu’s administration celebrated the Naira’s recent improvement. On Wednesday, Onanuga had hailed the currency’s performance, noting its strongest level in weeks.
“The currency closed at 1,558 naira per dollar, its most substantial level against the greenback since Aug. 21,” Onanuga stated on his official X account. This praise was linked to the government’s successful $900 million bond sale, which was expected to bolster the Naira and signal economic stability.
However, the subsequent depreciation highlights the volatility and unpredictability of the foreign exchange market. Analysts and economists often point out that currency values can fluctuate rapidly due to a variety of factors, including market sentiment, economic policies, and external financial pressures.
The sharp fall in the Naira’s value has sparked concern among investors and traders. The sudden depreciation raises questions about the stability of Nigeria’s currency and the effectiveness of recent economic measures.
Economic experts suggest that the Naira’s fluctuations are influenced by both domestic and international factors. These include market reactions to economic policies, investor confidence, and global financial trends.
