By Elizabeth Adegbesan
The naira on Friday depreciated to N1,425 per dollar in the parallel foreign exchange market, compared with N1,422 per dollar recorded on Thursday.
The local currency also weakened slightly at the Nigerian Foreign Exchange Market (NFEM), where it traded at N1,381.5 per dollar, according to data from the Central Bank of Nigeria (CBN).
The latest figure represents a 50 kobo depreciation from the N1,381 per dollar recorded at the official market on Thursday.
Following the movement in both markets, the gap between the parallel and official exchange rates widened to N43.5 per dollar from N41 per dollar the previous day.
Meanwhile, turnover at the NFEM increased by 40 per cent to $287.8 million on Thursday from $205.4 million recorded on Wednesday.
A foreign exchange dealer, Mr Audu Yisa, attributed the pressure on the naira in the parallel market to rising demand and limited availability of dollars.
“Today, I bought a dollar for N1,405 and sold it for N1,424. In the morning, a dollar was sold between N1,415 and N1,419.
“The truth is that dollars are scarce. Importers and parents paying school fees abroad cannot get enough forex from banks, so they come to the parallel market. Since demand is high and supply is limited, the price goes up. Speculation is also worsening the situation,” he said.
Another trader, Mr Nurudeen Danjuma, linked the depreciation to broader economic factors, including reduced foreign exchange inflows and increased demand for dollars as a store of value.
“It is simply a case of demand and supply. Nigeria’s oil revenue is low, and foreign investment has reduced, meaning fewer dollars are coming into the country.
“When people see the naira losing value, they rush to hold dollars to protect their wealth. That panic further pushes up the parallel market rate,” he said.
Danjuma added that the naira had continued to fluctuate around the N1,300 to N1,400 per dollar range in the parallel market in recent weeks.
