The Nigerian currency continued its downward trend, falling to ₦1,585 per dollar in the parallel market on Wednesday from ₦1,565 per dollar recorded on Tuesday. This decline marks another setback for the naira, which has struggled to maintain stability in the face of growing foreign exchange pressures. Similarly, in the Nigerian Foreign Exchange Market, NFEM, the naira depreciated to ₦1,546 per dollar from ₦1,537 per dollar, reflecting a ₦9 drop within 24 hours. This movement further widened the gap between the parallel market and the official exchange rate, with the difference increasing to ₦39 per dollar from ₦37 per dollar recorded the previous day.
The latest figures released by the Central Bank of Nigeria indicate a continued struggle to stabilize the currency amid forex supply shortages and speculative trading activities. The market remains volatile as demand for foreign exchange far exceeds supply, driving up the exchange rate and fueling inflationary concerns. Importers, manufacturers, and businesses reliant on foreign currency transactions are facing increased costs, which could lead to higher prices for goods and services across various sectors. The forex scarcity has been exacerbated by declining foreign investment inflows, reduced dollar liquidity, and uncertainties surrounding Nigeria’s economic policies.
Financial analysts attribute the persistent depreciation of the naira to a combination of domestic and global factors. The impact of Nigeria’s heavy reliance on imported goods continues to weigh on the currency, as the country struggles to generate sufficient forex earnings to support the naira. The slowdown in crude oil exports, which remain the country’s primary source of foreign exchange, has also limited the availability of dollars in the market. Global economic uncertainties, coupled with interest rate adjustments by major economies, have further discouraged foreign investors from injecting funds into the Nigerian market.
Despite measures by the Central Bank of Nigeria to stabilize the exchange rate, the naira has remained under intense pressure. The apex bank has introduced various policies, including interventions in the forex market and adjustments in monetary policies, aimed at curbing the continuous depreciation of the currency. However, the effectiveness of these strategies remains uncertain, as forex demand consistently outpaces supply. The rising exchange rate has triggered concerns among businesses and consumers, with fears that inflation could spiral further if the situation persists. Nigeria’s inflation rate has already reached alarming levels, with the cost of essential commodities soaring beyond the reach of many households.
Economic experts have called for urgent structural reforms to address the root causes of naira depreciation and ensure long-term stability. Recommendations include increasing local production to reduce import dependence, boosting non-oil exports to generate alternative forex earnings, and creating an investment-friendly environment to attract foreign capital. Without concrete steps to tackle these challenges, the naira may continue to decline, posing severe consequences for the economy.
The government’s commitment to economic diversification remains critical in mitigating the impact of currency depreciation. Strengthening the agricultural, manufacturing, and technology sectors could enhance forex inflows and ease pressure on the naira. The push for increased diaspora remittances and foreign direct investments also remains crucial in stabilizing the exchange rate. As stakeholders closely monitor developments in the forex market, attention is on the Central Bank of Nigeria and government agencies to implement sustainable policies that will restore confidence in the naira and ensure economic stability.
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