The Nigerian naira has continued to lose value against the United States dollar, with the exchange rate reaching N1637.59 at the close of trading on Tuesday. This marks another significant drop in the currency’s value, as it depreciated by N14.63 from Monday’s rate of N1622.96.
According to data from the Nigerian Autonomous Foreign Exchange, this decline represents a 0.90% drop in the value of the naira against the dollar, making it increasingly costly for Nigerians to purchase foreign goods and services. The foreign exchange market saw a high level of activity, with a turnover of $143.15 million, reflecting the intense trading pressures on the naira.
The trading session on Tuesday was particularly volatile, with the spot rate of the naira closing at N1637.59, which was a slight appreciation of N3.61 from the day’s opening rate. However, the forward rate showed considerable fluctuations, with a high of N1655.00 and a low of N1499.00, highlighting the uncertainty and instability in the market.
Just a few days earlier, the naira had shown signs of recovery in the official foreign exchange market. On Friday, the currency appreciated by 2.9% against the dollar, as a significant increase in dollar supply led to the naira being traded at N1593.32, compared to N1639.41 on Thursday. This temporary gain was driven by an inflow of $245.17 million into the market, boosting the naira’s value.
The recent depreciation of the naira coincides with a global drop in oil prices, which have fallen below $70 per barrel. Nigeria’s economy is heavily dependent on the oil sector, which accounts for over 80% of government revenue and nearly 90% of export earnings. This reliance on oil makes the economy particularly vulnerable to fluctuations in global oil prices.
Former Chief Economist of Zenith Bank, Marcel Okeke, expressed concerns about the impact of these developments on Nigeria’s economy.
“The combination of pipeline vandalism, organized youth involvement, and the sudden crash in oil prices has severely endangered the oil sector, which is crucial for oil exploration and production,” Okeke told The PUNCH.
He added, “The reduction in revenue, coupled with the government’s increased borrowing from dollar-based bonds, spells disaster for the economy.”