The Naira on Tuesday depreciated to N1,600 to a dollar in the parallel market.
This shows a significant decline from its previous rate of N1,590 to a dollar witnessed over the past weekend, signaling ongoing pressure on the Nigerian currency in the unofficial market.
However, the Naira gained some ground in the Nigerian Autonomous Foreign Exchange Market, where it appreciated N1,579.22 per dollar.
NAFEM represents a vital trading segment where investors, exporters, and end-users conduct foreign exchange transactions based on prevailing market conditions.
The indicative exchange rate for the market edged down slightly to N1,579.22 per dollar, from N1,579.89 per dollar recorded last Friday.
This little fluctuation suggests that the Naira has gained 67 kobo in this regulated foreign exchange market.
Adding to the dynamics of the market, there was a significant increase in the volume of dollars traded. The total amount of dollars exchanged in NAFEM surged by 41.4 percent, climbing to $162.99 million from $115.23 million reported last weekend.
This uptick in trading activity underscores the heightened demand for foreign currency, which continues to influence the Naira’s exchange rate.
The divergent movements between the parallel market and NAFEM have led to a widening margin between the two rates.
The gap between the exchange rates expanded to N20.78 per dollar, compared to a margin of N10.11 per dollar observed last Friday. This growing disparity reflects the challenges in achieving convergence between the official and unofficial forex markets.
Although the Naira has appreciated in NAFEM, the ongoing worries about the currency’s stability are highlighted by the weakness of the parallel market.
The dynamics between supply and demand for dollars will continue to influence the direction of the Naira as the market develops, with ramifications for investors, companies, and Nigeria’s economy as a whole.
