The naira on Thursday fell sharply against the dollar by 3.5 per cent in the parallel market, popularly called black market.
Data collated from street traders and online data collating platforms showed that the naira depreciated by ₦55 as the dollar was quoted at ₦1,580 compared to ₦1,525 on Wednesday in the black market.
The local currency had appreciated to as high as ₦1,485 per dollar last month in the black market.
“The gains are not sustainable,” said, Ayokunle Olubunmi, head of financial institution ratings at Agusto & Co.
He said although devaluation in 2025 would not be as steep as 2024, there will still be some devaluation.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), said the BDCs are constrained by availability, unfavourable offer rates, limited participating banks, lower margins and business uncertainties.
According to him, the combination of all the aforementioned factors creates an atmosphere of diminished confidence in the supply framework, triggers currency substitution, awakens speculative activities, and leads to the unfortunate current regression of the naira from strength to weakness.
“I therefore urge the apex monetary authorities to sustain their magic wands, calibrate their intervention in the retail end of the market through the BDCs , grants approval for the importation of dollar cash to licensed operators and finally put a monitoring mechanism and framework for a transparent banks dollar sales to the BDCs.
“Above all the fiscal authorities should maintain the successes on reduction of fiscal deficit, disinflation in productivity reach, forward communication and information.
“I also called on the Federal Government, the operating states units, Government agencies to declare a state of emergency on inflation for sustained growth and alleviation of poverty.
“Finally, the operators should embrace the new reforms and ensure strict compliance,” Gwadabe said.
On Wednesday, the naira witnessed some pressure across the foreign exchange (FX) market following an increase in demand for the dollar by the end users.
At the official FX market, the naira depreciated as the dollar was quoted at ₦1,500.80 on Wednesday, marking 0.6 percent or ₦9.13 loss, as against the previous close of ₦1,491.67, on the Nigerian Foreign Exchange Market (NFEM), data from the FMDQ Securities Exchange Limited, indicated.
Data from the Central Bank of Nigeria (CBN), showed that the naira also depreciated slightly to ₦1,505 per dollar on Wednesday compared to ₦1,502 on Tuesday, at the NFEM.
Authorised currency dealers quoted the dollar at the highest rate of ₦1,505 on Wednesday from ₦1,503 quoted on Tuesday. The market recorded the lowest rate of ₦1,497.10 on the same day as against ₦1,490 on the previous day.
Some traders who spoke with BusinessDay on Wednesday could not say exactly why the pressure resurfaced, but said there was a slight increase in the demand for the dollar.
(BusinessDay)
