Naira depreciate to N1,590/$ in parallel market

The Naira took another hit yesterday, sinking to N1,590 per dollar in the parallel market, down from N1,580 just a day prior. The depreciation trend extended to the Nigerian Autonomous Foreign Exchange Market (NAFEM), where the Naira weakened to N1,582.09 per dollar from Monday’s rate of N1,570.99, marking an N11.1 drop.

Data from FMDQ revealed a significant decline in dollar trading volume, which plunged by 18.2% to $201.43 million, compared to $246.44 million traded on Monday. This shift narrowed the gap between the parallel market and NAFEM rates to N7.91 per dollar, down from N10.8.

Currency trader Isa Garba attributed the Naira’s slide to a sharp increase in dollar demand coupled with a dwindling supply. “When the Naira appreciates at market close, it usually signals strong dollar supply and balanced demand,” Garba explained. “However, today the Naira depreciated by N10 as dollar supply dwindled. I bought dollars at N1,580 and sold them at N1,590, with the morning rate peaking at N1,600 before settling.”

The scarcity of dollars and the reduced presence of traders in the market are amplifying the pressure on the Naira, driving its continued depreciation.