Why the naira depreciated in the official window after a two-day gain

• The Nigerian currency declined by 0.08% in the official market, closing at N1,451.94 per dollar
• Currency dealers quote the naira at a high of N1,691 per dollar and a low of N1,540 in the official market
• The naira, however, gained in the parallel market to trade at N1,601 per dollar from N1,700

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Currency dealers in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, September 30, 2024, quoted the dollar at a high of N1,691 per dollar and a low of N1,540.

This comes as the naira reversed its two-day gain in the official window to close at N1,541.94 per dollar from N1,540.78 per dollar it traded on Friday, September 27, 2024.

The naira depreciates in the official markets Credit: Bloomberg/Contributor
Source: Getty Images

Naira reverse two-day gain

Data from the FMDQ Exchange shows that the naira’s depreciation on Monday, September 30, 2024, represents 0.08%, following a decline in foreign exchange turnover at $181.86 million.

The naira’s marginal decline comes after the Central Bank of Nigeria (CBN) sold dollars to Bureau de Change (BDC) operators.

The apex bank sold another round of dollar sales to licensed Bureau De Change Operators.

The move is part of the apex bank's efforts to halt the naira's depreciation in the foreign exchange markets. 

The CBN fixed the exchange rate limit for the BDCs when reselling cheap dollars to Nigerians. 

The naira gains in the parallel market

In the parallel end of the forex market, the naira appreciated massively by 0.61 to trade at N1,601 per dollar from N1,700 it traded on Sunday, September 29, 2024.

Black market dealers disclosed that the naira's relative appreciation was due to the CBN's recent intervention in BDC operators.

Abbas Yishau, a currency dealer on the Ogba axis of Lagos, told Legit.ng that the demand for the naira moderated as more buyers stayed away.

“We did not experience much demand for the dollar because the market is somewhat saturated after CBN sold dollars to market dealers,” he said.

Economic analysts believe the naira will slide to N2,000 per dollar before December.

Janet Ogochukwu, senior banker and analyst, disclosed that the demand for the dollar is still very high amid scarcity.

“What we have now is that importers are demanding more FX as Christmas approaches.”

I predict that the naira will hit the N2,000 ceiling on or before December,” she said.

Customs slashes exchange rate to clear goods at ports

Legit.ng earlier reported that CBN has reduced the exchange rates for cargo clearance at the nation's seaports and airports.

According to information on the official trade portal of the Nigerian Customs Service (NCS), the Nigeria Customs duty rate now stands at N1637.692 a dollar as at Monday, September 30, 2024.

The new rate reflects a slight reduction from N1,666.219 per dollar on Friday, September 27, 2024.

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Source: Legit.ng