By John IKani
Naira, the Nigerian currency, suffered a significant decline on Friday, reaching an all-time low of N895 per dollar at the parallel market, also known as the black market.
The drop amounted to a depreciation of 1.12 percent compared to the previous day’s rate of N885/$1.
The cause of the depreciation can be attributed to the escalating demand for dollars, particularly from individuals who intend to travel for business or educational purposes.
Many people seeking to go abroad are purchasing dollars at the black market, thus contributing to the increased demand.
Bismarck Rewane, the managing director/chief executive officer of Financial Derivatives Company Limited, predicts that the naira might surpass the N900/$ threshold before a potential recovery.
Meanwhile, at the Investors’ and Exporters’ (I&E) forex window, Nigeria’s official foreign exchange market, the naira experienced a positive turn.
It appreciated by 4.30 percent, with the dollar quoted at N743.07 on Friday, compared to N776.50 quoted on Thursday, according to data from the FMDQ.
The bids from willing buyers and sellers at the I&E window remained high, reaching as much as N799 per dollar on Friday.
Although slightly weaker than the previous week’s Friday rate of N799.50/$1, it was stronger than Thursday’s rate of N804/$1.
At the market auction, lower bids were observed at N475 per dollar, stronger than the bids on Thursday and Tuesday, but weaker than the rate of N465.00 recorded on the previous Friday at the I&E window.
During the course of the week at the I&E window, trading activity decreased by 10.1 percent ($43.7m), amounting to $389.1m in total.
In addition, the dollar showed a slight appreciation of 0.1 percent against the naira, reaching N776.50/$1.00.
In contrast, at the parallel market, the dollar experienced a weekly appreciation of 2.3 percent against the naira, reaching N890.00/$1.00.
Analysts at Afrinvest Securities Limited observed that the spread between both FX rates diverged from the previous week’s trend, with the weekly average expanding by 25.7 percent to N111.9.
