Why the naira's value against the dollar sank to its lowest

• The naira sunk to its lowest in the official market, closing at N1,690.37 per dollar in the official market
• This is the first time the naira’s value has dropped this low despite various policies of the Central Bank of Nigeria (CBN)
• In the parallel segment of the FX market, the Nigerian currency appreciated, gaining N5 to close at N1,735 per dollar from N1,740

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

The Nigerian currency, the naira, depreciated by 2.31% or N38.12 on Monday, November 18, 2024, in the Nigerian forex market to close at N1,690.37 per dollar, relative to N1,652.25 on Friday, October 15, 2024.

Data from the FMDQ Exchange shows that forex supply in the official market stood at $173.14 million, representing a 42% decline from the $296.63 million on the previous trading day.

The naira drops to its lowest value as a report predicts further devaluation Credit: Bloomberg/Contributor
Source: Getty Images

The naira appreciates in the parallel market

Willing buyers and willing sellers quoted the dollar at a high of N1,699 and a low of N1,633 per dollar.

In the parallel segment of the FX market, the Nigerian currency appreciated, gaining N5 to close at N1,735 per dollar from N1,740.

As of Friday, November 15, 2024, the naira’s value to the dollar rose by 159 basis points compared to the previous week, closing at N1,625 per dollar.

However, weekly forex turnover at NAFEM improved by 154.6%, closing at $527.5 million.

New report predicts new rates in 2025

Legit.ng reported that the Central Bank of Nigeria (CBN) disclosed that Nigeria's foreign reserves rose weekly to $40.2 billion as of November 13, 2024, the highest in 33 months.

In its Nigeria Macroeconomic Outlook 2025, Veriv Africa predicted that the naira’s volatility will persist in 2025, extending the challenges facing the local currency, Legit.ng reported.

The data insight firm warned that Nigeria’s inability to raise its oil output to 1.5 million barrels daily has disrupted its trade balance, straining the naira further.

Experts predict more depreciation for the naira

An economic expert, Janet Ogochukwu, believes that Veriv Africa’s prediction is spot on considering the trajectory of the local currency, saying that there have been other forecasts of the naira exceeding the N2,000 per dollar ceiling on or before December 2024.

“What the insight firm said is not different from what other right-thinking experts have been saying: the naira’s volatility might worsen in the months ahead.The CBN is responsible for fixing the gap between the official and parallel markets. The arrowhead of Nigeria’s economic woes is the foreign exchange instability, which makes it challenging for Nigerians and businesses to plan,” she said.

Foreign investors pull out of Nigeria as naira crashes

Legit.ng earlier reported that foreign inflows into the Nigerian Exchange Limited (NGX) dropped to the lowest point in September at N11.26 billion.

The development is based on data on the domestic and foreign portfolio investment on the NGX.

The report shows that as foreign inflow plummeted, foreign investors increased the amount they liquidated between August and September 2024.

Source: Legit.ng