Last week, there was a brief respite as the country’s currency strengthened against the dollar, trading at N970/$1 in the parallel market compared to N1300/$1 the previous week.
However, the naira started this week on a weak note, with exchange rates ranging from N1000 to N1020/$1 on Monday. This represents a slight depreciation from the N970/$1 rate over the weekend. Similarly, at the official FMDQ market, the Naira depreciated slightly by 4.24 percent to N809.02/$1, down from N780.03/$1 on Friday.
Meanwhile, Foreign Exchange Reserves in Nigeria increased to $33,340 million in October from $33,240 million in September 2023.
DAILY POST reports that the Naira has continued to fluctuate since the Central Bank of Nigeria floated the currency in the forex market on June 14, causing concerns among industry stakeholders.
“The strength of the Naira is determined purely by crude oil sales. Unless we witness substantial crude oil exports, the currency will remain unstable.”
Aja’s stance comes as Nigeria recorded N5.14 trillion from crude oil sales in the first three months of 2023, up from N4.9 trillion in the previous quarter, according to the National Bureau of Statistics. Speaking with NUBUNK POST on Monday, a renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola, stated that the ongoing trend in the forex market is symptomatic of a currency struggling to find its fair value in the marketplace.
According to him, for the Naira to regain sustainable strength, the Central Bank of Nigeria and the federal government must consistently plan to address the supply rigidities of foreign exchange.
“All that is ongoing regarding the Naira exchange rate to US$ is symptomatic of a currency struggling to find its fair value in the marketplace. Even though it started bouncing back from a rate of over N1300 to US$ at some point, there is nothing on the ground to celebrate in the Nigerian forex market yet.
“Strengthen investor confidence: Engaging with both local and foreign investors to address their concerns and create a conducive business environment is crucial. The government should focus on improving governance, ensuring the rule of law, and addressing security challenges, which would attract more foreign investments and boost the Naira.
“It’s important to note that sustaining the Naira’s gains against the Dollar is a complex challenge that requires a comprehensive approach. These suggestions provide a starting point but should be accompanied by continuous monitoring, evaluation, and adjustments based on the evolving economic landscape”, he stated.
Meanwhile, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, said the government should firm up its forex supply in the market.
“The stability of the Naira is dependent on available forex to intervene in the market. The recent decline could be attributed to the assertions by the airlines that only 10 per cent of their backlog has been cleared. This shows that the CBN needs to do more to create confidence in the system.
“Crude oil revenue is one of the country’s major sources of revenue, and fluctuations will affect our ability to increase revenue to show up in foreign reserves.
“The government should intensify its intervention by supplying more forex to clear the backlogs and meet new requests.”
