Volatility of the Naira in the FX market is expected to persist in the coming days, , with black market rates projected to trade as high as N985 per US Dollar in the short term, a report by Stear’s Africa FX Monitor has revealed.
The exchange rate between the naira and dollar quoted for around N1000/$1 on Thursday as forex traders continued to grapple with dollar scarcity.
The exchange rate had weakened to N983/$1 in the afternoon, however, several social media reports indicate it was quoting for N1000/$1. The exchange rate also closed at N770.7/$1 on the official NIFEX window.
Over the past seven years, Nigeria’s currency has shed over 30 per cent of its value.
Despite the recent attempt by the Federal Government to unify the country’s multiple exchange rate system and restore balance to the forex market, Stears’ Africa FX Monitor indicates that market participants are pricing in forex market fundamentals and distortions, leading to ongoing challenges in achieving forex stability.
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Fadekemi Abiru expressed concerns about the ongoing Naira volatility. She, however, noted that the knowledge of this volatility should help Nigerian businesses in making informed decisions.
“Stears’ Africa FX Monitor serves as a vital tool for understanding and responding to the Naira’s fluctuations. The continued unpredictability of the Naira underscores the importance of timely and informed decision-making for businesses and investors in Nigeria,” she said.
Also commenting on the report, Senior Economist at Stears, Dumebi Oluwole, said:
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“The dynamics of the Naira are closely intertwined with global economic trends, geopolitical events, and local policy decisions. Stears’ Africa FX Monitor goes beyond the numbers, providing businesses and investors with a nuanced understanding of how these factors impact the Naira’s value. In today’s volatile market, knowledge is a powerful tool for making strategic financial decisions.”
The Stears’ Africa FX Monitor highlights fiscal policies, external trade, and global market trends, including inflation rates, interest rates, policy events, and geopolitical factors as key influencers affecting the Naira’s performance.
The intelligence tool, a comprehensive exchange rate data repository, provides daily FX updates on Africa’s top economies, such as Nigeria, Kenya, and South Africa. It also includes insights on daily FX drivers.