Nigeria Naira Plummets 23% in Four Days: Currency Dealers and Analysts Weigh In

In the past week, the Naira experienced a drastic 23% depreciation against the dollar, attributed to a surge in demand for dollars in the parallel market driven by both banks and end-users, combined with slow forex disbursement to BDCs by the Central Bank of Nigeria (CBN).

This decline marks the worst weekly performance of the Naira since February, raising concerns among currency dealers and analysts about the currency's future stability. Despite the CBN's intervention in the official Nigeria Foreign Exchange Market (NAFEM) on Friday, offering some relief, uncertainties persist regarding the Naira's trajectory in the coming week, with the pace and effectiveness of CBN intervention being a crucial determinant.

Additionally, factors such as sharp practices exploiting exchange rate differentials and scant forex supply in the official market have contributed to the Naira's recent woes.

However, currency dealers express cautious optimism about the Naira's potential for appreciation shortly, contingent upon continued CBN intervention and renewed foreign portfolio investment flows.


Source: Vanguard