The Nigerian Naira has taken another hit in both official and parallel foreign exchange markets, with rates declining sharply on Friday.
This drop saw the national currency sliding to N1,670/$ from the previous N1,600/$ at the parallel market, while closing at N1,537/$ officially, down from N1,498/$.
“The market is too much,” remarked Ibrahim Yahu, a Bureau De Change operator, reflecting on the rapid increase in demand for the dollar. “If care is not taken, it will go back to N1,680.”
This decline comes despite efforts by the Central Bank of Nigeria (CBN) to boost liquidity in the forex market. Recent data indicates a total transaction volume of $3.83bn within eleven days of trading activities, facilitated through the Nigerian Autonomous Foreign Exchange by Deposit Money Banks.
“The recent reforms initiated by the central bank are yielding positive results in the FX market,” stated Olayemi Cardoso, Governor of the CBN, during an interactive session organized by Senate Committees on Finance, Appropriations, Banking Insurance, and Other Financial Institutions.
Nevertheless, the gap between official and parallel market rates continues to widen, raising concerns about the resurgence of round-tripping activities. This challenge persists despite the CBN’s directives to banks to sell excess dollar stocks and warnings against hoarding foreign currencies for profit.
“We urge the government to intensify efforts towards addressing the twin economic challenges of naira devaluation and inflationary pressure,” emphasized Dele Oye, National President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA).
Oye stressed the importance of stabilizing the currency to make agricultural inputs more affordable and bolster consumer purchasing power. “A robust economic policy aimed at defending the Naira to reach an acceptable exchange rate of 750 Naira to one USD is essential,” he added.
To mitigate the risks faced by farmers and increase efficiency throughout the agricultural value chain, Oye called for enhanced security and infrastructure in farming communities. Additionally, he advocated for fair trade practices to encourage competitive pricing without compromising the welfare of local producers and consumers.
The plea from NACCIMA comes amid a protracted inflationary pressure and exchange rate crisis in the Nigerian economy. Data from the National Bureau of Statistics revealed a rise in Nigeria’s inflation rate to 29.90 percent in January 2024, up from 28.92 percent in the previous month.
As the country grapples with these economic challenges, stakeholders are emphasizing the need for concerted efforts to stabilize the currency, boost local production, and address inflationary pressures to ensure economic resilience and food security for all citizens.