The naira, on Monday, continued its depreciation streak at the parallel section of the foreign exchange (FX) market.
The local currency began the week at N1,225 per dollar — weakening by N55 or N4.70 percent compared to the N1,170 it traded last Thursday.
Bureaux De Change (BDC) operators, popularly known as ‘abokis’, told journalists that the high FX rate was largely driven by volatility and the scarcity of the greenback.
“The dollar scarcity is now scary. Moreso, the price is not stable,” Aliyu, a street trader, said.
The currency traders quoted the buying rate of the dollar at N1,215 and the selling price at N1,225 per dollar, leaving a profit margin of N10.
On the official market side, the local currency appreciated by 0.22 percent — from 810.05 per dollar on Thursday — to close at N808.27 on Friday.
According to details on FMDQ OTC Securities Exchange, a platform that oversees official foreign exchange trading in Nigeria, the naira recorded a high of N885 and a low of N700.
On September 22, 2023, Wale Edun, the minister of finance, linked the continued decline in the value of the naira to overdue forward payments of $6.8 billion.
Edun said the challenge is that the market is not liquid enough, hence the volatility in the FX market.
“We are committed to encouraging liquidity based on reforms that have been made at the moment, on the fiscal side and the monetary side. And together with the restoration of trust and confidence we think the FX flows will return,” the minister said.
“The commitment is to maintain the existing reforms and improving them. Improving the FX market further so the gap narrows”.
On Monday, President Bola Tinubu said “crucial plans are underway to improve foreign exchange liquidity”.
The president added that his administration will honour every “legitimate contract with respect to the nation’s foreign exchange obligations”.