The Nigerian naira faced a downturn on Wednesday against the US dollar as the local shed 1.47 percent at the black market to N1,500 per dollar.
This development comes hot on the heels of the Central Bank of Nigeria’s (CBN) decision to raise its monetary policy rate (MPR) by 150 basis points to 26.25 percent.
Just a day prior, the naira had exhibited resilience against the dollar following a two-day of gains that brought it down from its recent peak of N1,530 on May 14, 2024.
The CBN’s move to raise the interest rate was met with anticipation and speculation across financial markets, and its impact on the naira’s value became evident soon after.
Traders at the black market reported a noticeable surge in demand for the dollar, albeit with limited availability in substantial quantities, exacerbating the currency’s depreciation.
Contrastingly, at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, the naira experienced a slight uptick, appreciating marginally by 0.23 percent.
The dollar was quoted at N1,465.68 compared to N1,468.99 recorded on Monday, as per data from the FMDQ Securities Exchange Limited.
During trading on Tuesday, the intraday high closed at N1,549 per dollar, displaying strength compared to the previous day’s closure of N1,556.
However, the intraday low remained stable at N1,401 per dollar, mirroring Monday’s rate of N1,400.
Market activity reflected a significant surge in the daily foreign exchange turnover, soaring by 66.14 percent to $268.17 million on Tuesday from the previous day’s $161.41 million, indicating heightened trading activity and increased demand for foreign currency.
The fluctuating dynamics in the currency market underscore the delicate balance between domestic economic policies and external market forces, with investors and traders closely monitoring developments for potential implications on trade and investment strategies.
As the naira navigates through these fluctuations, stakeholders remain vigilant, seeking opportunities and mitigating risks in the ever-evolving financial landscape.