Increased demand for dollar causes Naira to depreciate to 1,420/$

The naira on Thursday continued its downward trend against the United States dollar, depreciating to N1,309/$ at the official market and N1,420 at the parallel market.

The new rate which indicates a depreciation of N90 or 6.8 per cent from N1,330 quoted by currency traders on Wednesday followed renewed dollar demand pressure in the foreign exchange market.

According to currency traders at the popular Wuse Zone 4 market, operators bought the greenback note at N1,340 and sold it at N1,420, leaving a profit margin of N80.

Malam Yahu Abubakar in a telephone chat said, “We are selling at N1,420 per dollar today and we bought at N1,340. The only reason why the naira is dropping is because of an increased demand for the greenback. The CBN is trying to address the situation but it has not affected the market.”

Another trader, Abubakar Taura, expressed caution in trading, citing ongoing concerns that the CBN might take some drastic measures to stabilise the dollar.

This apprehension, he explained, was driving high-profit margins, providing traders with an opportunity to recover losses.

“Yes, the dollar is rising gradually but we are still afraid and trading cautiously because anything can happen and it falls. You would have noticed that the profit margin is high too. We have to recover some of our losses.”

With the current exchange rate, the naira has lost 26.2 per cent in two weeks when compared to N1,125 per dollar quoted on April 12, 2023, on the parallel market, popularly called the black market.

On Monday, the Central Bank of Nigeria approved the allocation of $15.83 million to 1,583 BDC operators. The move was aimed at enhancing liquidity in the unofficial market.

The CBN in a letter to BDCs announced the allocation of $10,000 to operators across the country. The allocation comes at a rate of N1,021 per US dollar, aimed at stabilsing the foreign exchange market and ensuring accessibility of foreign currency to eligible end users.