Naira Drops as Demand for US Dollar Spikes

The Nigerian naira depreciated as demand for foreign currency increased at the official market. Surprisingly, the exchange rate appreciated at the black market as year-end demand slowed downward.

While analysts remain optimistic, remittance from Nigerians in the diaspora has been unable to saturate FX scarcity experienced in the parallel market. In the official space, absence of the central bank’s intervention has have a run on exchange rate.

The naira bear has been rough down the year, culminating in a large official depreciation in the first half of 2023.

The pressures in the forex markets are associated with foreign currency scarcity challenges. Nigeria faces challenges attracting US dollar inflows, though demand remains high for the import-dependent economy.

Data from the FMDQ Platform showed that the Naira depreciated by 1.16% at the official market to close at N854.61 per US dollar. The local currency registered a moderate daily positive moment as it seeks to regain value after it was exchanged at N844.85 on Tuesday.

However, in the parallel market, the Naira edged the dollar in strength by 1.07% as it appreciated to close at N1,205 to the dollar. Nigeria’s gross external reserves remained tight at press time, hovering below $33 billion amidst pressures in the global commodity market.

Analysts noted that oil prices showed a positive trend above the $70 per barrel mark, with Brent Crude increasing by 1.28% to trade at $80.24 per barrel and WTI also rising by 1.31% to trade at $74.91 per barrel on Wednesday. #Naira Drops as Demand for US Dollar Spikes

Naira Devaluation Deepens Economic Crisis in Nigeria