The naira continued to depreciate against the dollar on Sunday, trading for 876/$ in the black market.
Some Bureau de Change employees who talked with The Punch claimed that a week ago, the local currency had swapped to the dollar at a rate of 820.
The Central Bank of Nigeria recently unified the country’s exchange rates, but the naira has since fallen against the dollar as a result of a lack of liquidity, rumors, and other issues.
According to Alhaji Sanni Abdul, a BDC operator in Lagos, “Naira is currently bought and sold at 850/$ and 876/$. The exchange rate has not been stable for some time now.”
Another BDC operator, Alli Ibrahim, said, “Things are getting more expensive. As of Friday, we were buying and selling the naira at 850/$ and 865/$.”
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise; Dr. Muda Yusuf, said the foreign exchange market was evidently under pressure as a result of several factors.
He said there was a curious surge in monetary expansion in the last month.
Yusuf said, “Money supply grew by an unprecedented 15 percent in one month between May and June 2023. Broad money grew by over N9tn, from N55.7tn to N64.9tn. This surge in monetary growth is unprecedented. Obviously, this must have had an effect on the exchange rate.”
He said the monetary authorities should investigate this drastic growth in money supply and take steps to curb subsequent expansion.
“Such dramatic growth in money supply poses a significant risk to macroeconomic stability, especially price stability,” he said.
He claimed that due to the severe illiquidity in the foreign exchange market, there had been an accumulation of unmet foreign exchange demand over the previous few years that was in the billions of dollars range.
According to him, the pressure of the backlog of unfulfilled orders and other maturing currency-related commitments had been unleashed on the investors’ and exporters’ window with a more liberalized forex market.
The naira, on the other hand, strengthened 3.24 percent against the dollar last week at the Investor & Exporter forex window.
According to information from FMDQ Securities’ official trading website, the value of the naira increased marginally by 3.24 basis points to 777.82/$. It was 803.90/$ at the conclusion of the previous week.
The naira had a $77.99m total turnover as of Friday, with an intraday high of 855/$ and a low of 665/$.