In a turn of events, the Nigerian naira experienced a notable dip against the dollar on Friday, January 12, 2024, both in official and black market exchange windows.
Data from the NAFEM, the official forex platform, revealed a N15.75 depreciation compared to its Thursday close of N874.79.
Financial analysts attribute the naira’s weakening to a combination of factors, citing heightened demand for foreign currency and persistent concerns over Nigeria’s oil production amidst global economic uncertainties.
At the close of business on Friday, the domestic currency depreciated by 1.8%, settling at N890.54/$1.
At parallel forex market, where unofficial trading occurs, the naira witnessed a 1.19% depreciation, quoting rates at N1,260/$1, with peer-to-peer traders slightly higher at N1,268.05/$1.
Notable figures in the financial sector weighed in on the situation. Mr. Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers, emphasized the importance of market and participant confidence for exchange rate stability.
Hee noted, “Confidence is what makes foreigners want to invest, and locals want to keep their investments here.”
Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, anticipates continued naira volatility due to lingering forex supply concerns.
The scarcity of dollars is fostering speculative buying, prompting more market participants to take long positions on the dollar while shorting the naira.
As experts delve into potential solutions, the consensus remains that concerted efforts are needed to instill confidence, improve security, enhance infrastructure, attract foreign direct investments, and stimulate local production to tackle the root causes of the currency instability.
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