Naira dips to N1,603.16/$1 amid depreciation pressure, experts warn of rising dollar demand

The naira began the week with a depreciation of N2.38 against the U.S. dollar, trading at N1,603.16/$1 at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, October 21, 2024.

This represents a slight decline from the N1,600.78/$1 rate recorded on Friday, October 18, 2024. Despite this, the parallel market remained stable, with the naira holding at N1,725/$1 for the second consecutive day.

Financial analysts have attributed the naira’s recent dip to increasing demand for dollars by importers and businesses amid foreign exchange shortages.

“The pressure on the official window is mounting due to limited dollar supply, which continues to drive slight depreciation,” said Tunde Oladipo, a Lagos-based currency expert.

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In contrast, the naira saw a modest gain against the British pound, appreciating by N10 to trade at N2,260/£1 compared to the previous rate of N2,270/£1.

Meanwhile, exchange rates for the Canadian dollar and Euro remained stable at N1,300/CA$1 and N1,850/€1, respectively.

Experts caution that continued pressure on the naira, particularly in the official market, could result in further depreciation unless the Central Bank of Nigeria introduces policies to bolster dollar supply and stabilize the currency.

“The government’s ability to intervene effectively will be key in curbing the naira’s slide and managing inflationary impacts,” Oladipo added.