On Thursday, the Nigerian naira slid 28 basis points against the US dollar in the foreign exchange market due to increased demand pressure. Analysts warn that exchange rate issues are likely to persist until a clear policy direction is established to defend the local currency against major foreign currencies.
Nigeria's foreign exchange liquidity crisis has kept the naira's value unstable, with its purchasing power reliant on the Central Bank of Nigeria (CBN) auctions. The exchange rate experienced a rise of over 7% after the CBN injected nearly $20 million to purchase local currency earlier this week.
According to FX spot data from the FMDQ platform, the naira depreciated by 0.28%, closing at ₦1,544.02 per dollar in the official market. An investment expert suggested that the CBN should establish a schedule for US dollar sales to authorized dealer banks and potentially to Bureau de Change (BDC) operators.
Critics argue that it is a significant policy miscalculation to expect the naira to withstand pressure in the FX market under the willing buyer, willing seller model. They emphasize Nigeria's lack of comparative advantage in production and weak export flows, questioning how a nation reliant on hydrocarbon sales can manage currency floatation amid high import bills.
Today, the naira stabilized at ₦1,645 per US dollar in the parallel market. Demand for invisible FX payments normalized following previous subsidized FX sales to BDCs. However, currency speculation is expected to increase as the gap between official and parallel market exchange rates widens to ₦100.
In global markets, oil prices rose after the Federal Reserve's larger-than-expected interest rate cut, with Brent crude up 1.72% to $74.92 and WTI rising 1.16% to $72.09. Additionally, gold prices surged over 1%, currently priced at approximately $2,608.90 per ounce as the Fed began its rate easing cycle.