LAGOS, Nigeria (VOICE OF NAIJA) – The naira on Thursday was traded at N1,309/$ and N1,420/$ at the official exchange window and parallel market respectively.
The decline in the currency was due to the high demand of the United States dollar in the Fx market.
According to the currency traders, the new rate shows that the naira depreciated by 6.8 per cent from N1,330 on Wednesday.
Currency traders at the popular Wuse Zone 4 market added that operators bought the greenback note at N1,340 and sold it at N1,420, leaving a profit margin of N80.
Malam Yahu Abubakar in a telephone chat with PUNCH, 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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Another trader, Abubakar Taura, expressed caution in trading, citing ongoing concerns that the CBN might take some drastic measures to stabilise the dollar.
This apprehension, he explained, was driving high-profit margins, providing traders with an opportunity to recover losses.
“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.”
With the current exchange rate, the naira has lost 26.2 per cent in two weeks when compared to N1,125 per dollar quoted on April 12, 2023, on the parallel market, popularly called the black market.
On Monday, the apex bank approved the allocation of $15.83 million to 1,583 BDC operators, with the aim to bolster liquidity in the unofficial market.
The CBN in a letter to BDCs announced the allocation of $10,000 to operators across the country. The allocation comes at a rate of N1,021 per US dollar, aimed at stabilizing the foreign exchange market and ensuring accessibility of foreign currency to eligible end users.
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At the official market, the naira depreciated to N1,309.88 against the dollar by the end of Thursday’s trading. This is a 0.10 per cent drop, from the previous rate of N1,308.52 recorded on Wednesday.
A summary of the forex transaction showed that the intra-day high depreciated by N68, closing at N1,435 per dollar from N1,367 per dollar. The intra-day low reduced to N1,100 from N1,098 recorded on Wednesday.
Forex trading volumes between a willing seller and a willing buyer experienced a significant increase of 61 per cent, with transactions reaching $318.08m, exceeding the $197.54m previously recorded at the Nigerian Autonomous Foreign Exchange Market on Wednesday.
At the just concluded World Bank/IMF meeting in Washington DC, United States., the CBN Governor, Yemi Cardoso, said that the Naira was declared the best-performing currency globally as of April 2024.
This achievement follows a series of foreign exchange market reforms and is supported by positive sentiment from leading international investment institutions, he declared.
However, it remains to be seen what strategies will be used by the apex bank to ensure the stability of the naira for a longer period.