Naira Falls To N1,420/$1 At Parallel Market, Traders Cite Increased Demand

The value of the naira versus the US dollar declined further, trading at N1,309/$ on the official market and N1,420 on the black market.

Currency brokers explain this away as more people want US dollars. In order to improve liquidity in the unofficial market, the Central Bank of Nigeria (CBN) has approved the distribution of $15.83 million to 1,583 Bureau De Change (BDC) operators.

The naira has dropped 26.2% in the last two weeks in spite of the CBN’s efforts, and traders are still wary because they fear that the bank may take dramatic steps to stabilise the dollar.

In a telephone chat, Malam Yahu Abubakar said, “We are selling at N1,420 per dollar today and we bought at N1,340. The only reason why the naira is dropping is because of an increased demand for the greenback. The CBN is trying to address the situation but it has not affected the market.”

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Abubakar Taura, another dealer, was cautious, expressing worries that the CBN would implement harsh measures to keep the dollar stable. High profit margins are fueled by this anxiety, enabling traders to recoup losses.

Taura said, “Yes, the dollar is rising gradually, but we are still afraid and trading cautiously because anything can happen, and it falls. You would have noticed that the profit margin is high too. We have to recover some of our losses.”

According to CBN Governor Yemi Cardoso, the naira was deemed the world’s best-performing currency as of April 2024 as a result of improvements made to the foreign exchange market and encouraging feedback from major international investment organisations.

What tactics will be employed to maintain the naira’s stability over time, meanwhile, is still to be seen.