Naira Depreciates Against Dollar
The Nigerian naira depreciates against dollar again as it continues its downward spiral across both official and black markets.
On Wednesday, November 20, 2024, the Nigerian currency closed at N1,687.52 per dollar, reflecting a 0.51% drop in the official window. 
This follows a brief rebound on Tuesday, November 19, when the naira had traded at N1,678.93 per dollar. However, despite this minor recovery, the naira depreciates against dollar further, hitting a new low and closing at N1,750 per dollar in the black market.
Depreciation Amid Low Forex Turnover
The Central Bank of Nigeria’s (CBN) struggle to manage the currency crisis continues as forex turnover plummets. On Wednesday, November 20, the forex market saw just $173.29 million in turnover, a steep decline from the previous day’s $296.63 million.
As dealers exchanged the naira, the spot rate reached a high of N1,705 per dollar, with some traders quoting as low as N1,601 per dollar. Experts speculate that with the widening gap between the official and parallel markets, the naira could soon hit N2,000 per dollar.
Economists like Janet Ogochukwu predict that the situation will worsen in the coming weeks. “The naira is already heading towards N2,000 per dollar, and it’s just a matter of days before the local currency hits this new low,” she remarked, citing the widening spot rate gap as an indication of the currency’s looming downfall.
High Dollar Demand Pushes Naira to New Lows
The growing demand for the dollar is exacerbating the naira’s depreciation. On the black market, the naira traded as low as N1,750 per dollar on Wednesday, driven by a strong demand for the US dollar, often seen as a safe-haven asset.
The widening supply-demand gap in the unofficial market has led to further instability in the naira’s value, putting additional pressure on Nigeria’s already fragile economy.
Foreign investors are also fleeing Nigeria, contributing to the naira’s decline. Recent reports revealed that foreign inflows into Nigeria’s stock market, the Nigerian Exchange Limited (NGX), dropped significantly in September to N11.26 billion.
As foreign investors pull out, there is a greater strain on the Nigerian currency, leaving the naira vulnerable to further depreciation.
What do you think is fueling the continued Naira depreciation against the dollar, and how can Nigeria address this challenge?
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