Emmanuel OchayiIn a day of fluctuating fortunes for Nigeria’s currency, the Nigerian naira depreciated against the dollar, closing at N854.61/$1 at the official market on Wednesday, marking a 1.5% drop.
Forex turnover also saw a decline of 21.45% to $181.30 million compared to the previous day, as reported by the official NAFEM window.
Mr. Olatunde Amolegbe, the former President of the Chartered Institute of Stockbrokers, emphasized the critical role of confidence in stabilizing the exchange rate.
He highlighted the need for both foreign and local investors to feel assured about the market, suggesting that structural changes such as improved security, infrastructure, and increased foreign investments could bolster stability.
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Echoing concerns, Bismarck Rewane, the Managing Director/CEO of Financial Derivatives Company Limited, emphasized lingering worries about forex supply, predicting continued volatility for the naira.
He pointed out the dollar shortage, indicating a trend of speculative buying of the dollar against the naira by market participants.
“The decision to clear FX commitment backs may positively impact market confidence in the medium term,” mentioned Amolegbe.
However, both experts implied that addressing the fundamental issues impacting forex supply and market confidence requires more than short-term measures.
While the official market reflected the naira’s depreciation, the parallel forex market recorded a 0.24% appreciation at N1238/$1, with peer-to-peer traders quoting around N1187.30/$1.
This contrasting scenario illustrates the disparities between official and unofficial forex markets, contributing to the ongoing volatility in Nigeria’s currency exchange.
The market continues to grapple with concerns over sustained forex supply, signaling potential challenges ahead as market players weigh their positions, contributing to the currency’s ongoing fluctuations.
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