In a continued slide against the dollar, Nigeria’s currency, the naira, has depreciated further, reaching an exchange rate of N1,740 per dollar in the parallel market.
This marks a drop from the previous rate of N1,739 per dollar, amplifying the concerns of Nigerians facing increasing financial pressures.
Meanwhile, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira appreciated slightly, standing at N1,601.2 per dollar.
This represents a modest improvement from the N1,600 exchange rate on Thursday.
Growing Gap Between Official and Parallel Market Rates
With this shift, the gap between the parallel and official exchange rates has widened to N140 per dollar from N137.8 per dollar just a day earlier.
This increasing margin has left financial analysts and economists worried about the long-term impact on Nigeria’s economy, as citizens continue to face the ripple effects of currency devaluation.
The widening disparity between the official rate and the parallel market rate raises questions about the stability of the naira.
Economist Bode Taiwo commented, “When you see this type of growing gap, it signals underlying problems in the economy. It means there’s something not adding up between market supply and demand.”
Trading Volumes Surge in Official Market
In a sign of increased trading activity, the volume of dollars exchanged in the official NAFEM market has jumped by 23 percent, rising from $230.99 million on Thursday to $284.93 million on Friday.
The increase in dollar turnover indicates a rise in demand, as businesses and individuals continue to depend on foreign currency to fund essential imports and transactions.
For many in Nigeria, the fluctuating exchange rates are a daily concern as the cost of imported goods, transportation, and essential services continues to escalate.
Economist Ibukun Alabi noted that this growing turnover in the official market “reflects the high demand for dollars, which directly impacts the purchasing power of the average Nigerian.”
Citizens Feel the Impact of Depreciation
The continuous depreciation of the naira has sparked worry among Nigerians who are bearing the brunt of rising costs in the country.
Families have reported price increases in everyday goods and services, which are directly tied to the exchange rate, especially in an economy highly reliant on imports.
Lagos resident and small business owner Nkechi Obinna said, “Every time the dollar goes up, we suffer. Our prices go up, and we can’t even keep up with basic costs anymore. It’s a struggle to make ends meet.”
Her experience is echoed by many Nigerians who rely on the naira’s stability to afford essentials.
Government’s Policy Struggles Amid Rising Inflation
Despite the government’s efforts to stabilize the currency through various economic policies, the naira’s depreciation has continued.
Central Bank interventions, such as injecting dollars into the official market, have shown limited success in reducing the pressure on the naira.
The Central Bank of Nigeria (CBN) recently implemented changes in forex policies to curb the naira’s decline, but results have been mixed.
With inflation rates on the rise, many Nigerians are facing the compounded issue of both a weakening currency and increased prices for basic goods.
Economic analyst Ifeoma Nwosu commented, “The rising inflation and currency depreciation are creating a perfect storm. It’s a delicate balancing act for the government to control inflation without further hurting the naira.”
Calls for Policy Reforms Grow Louder
Economists have called for more comprehensive reforms to address the naira’s depreciation, advocating for policies that boost local production and reduce Nigeria’s reliance on imports.
Nigeria’s heavy dependence on foreign goods has left it vulnerable to global currency fluctuations, making it difficult to sustain the naira’s value in the face of international market pressures.
