Naira falls as pressure on FX intensifies

The naira opened the week with a sharp decline, losing N21 against the U.S. dollar at the official market on Monday, September 23, 2024.

It traded at N1,562/$1, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), a drop from N1,541/$1 in the previous session. Parallel market figures

Experts attribute the naira’s weakening to sustained pressure on foreign reserves and low dollar inflows, driven by dwindling oil revenues.

Financial analyst Ibrahim Salisu noted, “The naira is likely to face more depreciation unless the Central Bank intervenes decisively or oil exports see a marked recovery. Current economic conditions aren’t favorable for the currency.”

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The naira also took a hit against the British pound, losing N25 to trade at N2,250/£1, while dropping N10 against the Euro to settle at N1,840/€1.

Although it remained stable against the Canadian dollar at N1,280/CA$1, market observers believe continued volatility in the forex market could affect other currency pairs soon.

“The parallel market will likely keep widening its spread, which will exacerbate inflationary pressures,” said economist Grace Olatunji.

With limited fiscal buffers, analysts warn the naira could weaken further unless external shocks subside.