The naira has experienced a slight dip against the dollar, ending a brief period of gains in the foreign exchange market.
On Monday, the official exchange rate stood at N1,538.50 per dollar, slightly lower than the N1,535 rate recorded on Friday.
This represents a depreciation of N3.5, signaling a change after days of appreciation for the Nigerian currency.
The recent dip in the naira’s value marks a shift from its previous gains, which had been driven by several factors.
At the parallel or black market, the naira closed at N1,630 per dollar on Monday.
This is also down from N1,600 per dollar recorded in the previous week.
The Central Bank of Nigeria’s (CBN) data, released on Monday, revealed this change in official rates.
It was the first time in several days that the naira has experienced a drop after the CBN launched its new Electronic Foreign Exchange Matching System (EFEMS).
EFEMS, introduced earlier this year, was designed to ensure more transparent and efficient forex transactions.
The system was expected to bring stability to the exchange rate by matching buyers and sellers of foreign currency through a digital platform.
The recent strength of the naira, prior to this fall, had been largely attributed to this system and the increase in Nigeria’s external reserves.
But with Monday’s dip, many are questioning whether the naira’s gains will prove sustainable in the long term.
“The electronic forex system has definitely helped bring some stability to the market, but this recent dip shows just how volatile the currency market can be,” said Dr. Musa Ibrahim, an economist with the Centre for Promotion of Private Enterprise (CPPE).
According to the CPPE, the surge in the country’s external reserves had helped support the naira’s earlier strength.
The increase in reserves was largely a result of higher oil prices and strategic foreign exchange management by the CBN.
However, market experts warn that the naira remains vulnerable to external shocks, particularly fluctuations in global oil prices and domestic economic challenges.
Nigeria’s economy is heavily dependent on oil exports, and any sudden drop in oil revenue could put additional pressure on the currency.
“The naira’s value will continue to be influenced by factors beyond the CBN’s control, such as global oil price movements and domestic inflation trends,” said Ibrahim.
The CBN’s recent efforts to stabilize the forex market through EFEMS have been praised by some analysts, who believe it can help prevent large-scale speculative trading and bring more transparency.
“EFEMS was a step in the right direction, but it is clear that more needs to be done to ensure the naira remains stable over the long term,” said Uche Chukwuma, a financial expert based in Lagos.
The foreign exchange market in Nigeria has always been subject to volatility, with significant swings in the value of the naira, especially in the parallel market.
This latest development comes after the Nigerian government has made efforts to diversify the economy and reduce its dependence on oil exports.
In recent months, the country has seen increased investment in non-oil sectors, such as agriculture and technology, which have shown promise in contributing to economic growth.
Still, the naira’s value remains a critical issue for many Nigerians, particularly in relation to the cost of living and access to foreign goods and services.
Inflation has been a persistent problem, and a weaker naira means that imported goods become more expensive for consumers.
“The drop in the naira’s value will affect the cost of goods and services, particularly imports,” said Amina Bello, a trader in Lagos.
“The high exchange rate makes it harder for us to afford basic items, and we’re already struggling with inflation.”
