The naira plunged to a record low against the US dollar in unauthorized trading on Thursday, data gathered from currency traders across the country showed.
In Lagos, forex traders around the Ikeja axis said the dollar traded at N935.00 per dollar, while traders in Abuja said it traded at N950.00 per $1 on Thursday compared to N915 and N920, 00 that was negotiated in the previous one. Wednesday session.
Similarly, currency traders in Uyo said the dollar was trading at N938.00 and N940.00 to the dollar on Thursday amid a significant increase in demand.
However, the local currency gained slightly against the dollar at the Investors and Exporters (I&E) window on Thursday, according to market records published in the FMDQ website.
Reacting to this, Razaq Fatai, an Abuja-based economist, said the main catalyst behind the currency’s falling value is a shortage of dollars amid rising demand.
Historically, he said, Nigeria’s foreign exchange has predominantly been earned from three channels including crude oil exports, remittances and investment inflows. Unfortunately, he argued, all three channels, especially crude oil exports, have proven inadequate to meet growing demands.
“In particular, average crude oil production for the first half of this year, around 1.2 million barrels per day (mbpd), is significantly below our historical average of 2.2 mbpd and the share of OPEC 1.74 mbpd,” he said.
Fatai said declining confidence in the national currency has led Nigerians to take an unfavorable position on the Naira, leading them to prefer to keep their savings in dollars.
To counter this trajectory and ensure exchange rate stability, Mr. Fatai said that a fundamental change depends on increasing exports, in particular raising oil production and facilitating non-oil exports.
“Addressing the issue of oil theft is crucial to raising oil production levels. At the same time, it is key to remove non-tariff barriers in non-oil commodity trade,” he said.
Meanwhile, in the official window, market data released on Thursday showed the Naira closed at N781.34 versus N782.38 per $1 registered on Wednesday.
Thursday’s rate implies an appreciation of 0.13 percent from N782.38 per $1 recorded in the previous session on Wednesday.
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