Naira Continues Downward Spiral Amid Dollar Scarcity, Prompts Concerns

In an ongoing trend, the Nigerian naira remains on a downward trajectory due to a growing scarcity of the U.S. dollar, according to research findings. At the parallel market, the naira began trading at 1,175/$ and closed at 1,190/$ on Friday, marking a significant decrease from two weeks earlier when it traded at 1,100/$ in the same market.

However, there was a slight appreciation in the naira’s value on the Investor & Exporter forex window, where it concluded trading at 808.28/$ on Friday, slightly up from 810.05/$ on Thursday, as reported by data from the FMDQ.

Bureau de Change Operators have expressed their concerns, indicating that the scarcity of the dollar has left them with little or no forex to provide to their customers. Some operators mentioned that the dollar was not readily available for purchase.

Jubril Mutiu, a BDC operator, stated, “On Friday, the price was 1,175/$, but we don’t even have it. It is not available right now.” Another BDC operator, Adamu Afeez, added, “We are looking for those to sell to us, but now, we don’t have the dollar to buy. If we don’t have one, we cannot sell.”

Ibrahim Abu, another BDC operator, highlighted the fluctuating nature of the exchange rate, saying, “We sold for 1,175/$ in the morning till afternoon on Friday. By 2 p.m., it was already selling for 1,190/$. It has been fluctuating. I don’t know what the rate will be on Monday.”

The naira’s depreciation has persisted, particularly since the Central Bank of Nigeria ordered lending institutions to allow the free flow of the country’s exchange rate in June. Prior to this policy change, the naira had traded at 471.67/$ on the official market on the FMDQ and 765/$ on the parallel market in June.

Dr. Aminu Gwadabe, the President of the Association of Bureaux De Change Operators of Nigeria, emphasized the importance of BDCs in achieving a stable and robust exchange rate in Nigeria. He called for cooperation from all stakeholders to address the challenges in the nation’s forex market and combat the depreciation of the naira. Gwadabe stressed that getting BDCs involved in the solution recipe could lead to a highly liquid market and stable exchange rates.

He also expressed concerns about illiquidity in the forex market and the presence of unlicensed forex dealers engaging in speculative activities, tarnishing the image of the sub-sector. Gwadabe underscored the need for genuine efforts to reverse the naira’s depreciation and strengthen the local currency for the benefit of the domestic economy.