According to statistics from the FMDQ platform that MarketForces Africa examined, the Naira strengthened by 21.36% in the official currency market, where the exchange rate ended at N864.29 per dollar on Monday from N1,099.05 on Friday.
The decision by the apex bank to let supply and demand dictate the currency rate and declining foreign reserves haven’t stopped the Naira bear market.
Regretfully, because of the significant daily fluctuations in exchange prices, the Nigerian Autonomous Foreign Exchange market has grown extremely unstable. In the currency market, large daily fluctuations have begun to become the norm.
On Friday, the local currency dropped more than 30% in a single day’s worth of transactions. In an attempt to fix itself, the exchange rate increased by more than 21% in favor of the local currency on Monday.
Analysts told MarketForces Africa that the large daily movement in rates signposts a weak FX outlook for a nation that relies heavily on imports with lower FX inflows to act as a shock absorber.
However, in the parallel market, the Naira depreciated by 1.86% to close at N1,207 per dollar due to sustained demand for the US dollar amidst the expectation that Nigerians in diaspora remittance will saturate the supply side.
In the global commodity market, oil prices showed a negative trend, with Brent Crude declining by 0.51% to trade at $75.45 per barrel and WTI also declining by 0.35% to trade at $70.98 per barrel on Monday. Nigeria’s external reserve remained below $33 billion, according to data from the Central Bank website.
On the economic side, analysts said they are less optimistic about the outlook for Nigeria, citing higher rates and risks of more persistent inflation mean a tighter grip on households.
