Naira Struggles as Foreign Exchange Market Faces Renewed Demand Pressure

The Nigerian Naira has once again found itself in the midst of a foreign exchange (FX) market storm as renewed demand pressure caused ripples of concern among traders and investors on Friday.

The three-day period of moderation came to an abrupt end with the Naira weakening against other currencies, triggering a surge in demand for foreign exchange.

On Friday, the local currency slipped by 0.34 percent to exchange at N870 against the United States Dollar at the parallel market, popularly known as the black market. This was lower than N867 per dollar the local currency traded earlier in the week.

However, at the official FX market, known as the Investors’ and Exporters’ (I&E) forex window, the Naira experienced a significant depreciation of 3.85 percent on Thursday to N768.60 from N740.08 it was quoted the day before.

The total currency traded at the official forex section declined by 42.15 percent to $88.66 million on Thursday from $153.28 million on Wednesday.

Forex buyers and sellers maintained bids as high as N869 per dollar on Thursday, weaker than the N845/$1 bid on Wednesday but stronger than N800 per dollar on Tuesday.

The market auction also recorded lower bids of N730.00, the same level on Wednesday and Tuesday but weaker than the N650.00 bids maintained on Monday at the I&E window.

At the money market, the Overnight (O/N) rate decreased by 10.20 percent to close at 1.30 percent on Thursday as against the previous close of 11.50 percent, and the Open Repo (OPR) rate decreased by 9.93 percent to close at 0.90 percent compared to 10.83 percent on the previous day.