Naira flat as dollar shortage hits parallel market

May 4, 2024 Vaseline stjohnson 0

On Friday, the naira remained stable at 1,380 as the dollar shortage affects the parallel market, also known as the black market.

Some traders sold one dollar at a price of N1,410 and N1,280 in various areas of the country on Friday, amid increased demand. “Demand is very high and the dollar is scarce in the market,” a trader told BusinessDay on Friday.

The trader said demand came from people who need dollars for personal or business trips, as well as importers.

The naira also closed stable at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as the dollar was quoted at N1,402.67 on Thursday compared to N1,390.96 closed on Tuesday ahead of the workers’ holiday, data indicated. from FMDQ Securities Exchange Limited.

The NAFEM window witnessed notable changes in currency values. On Thursday, the intraday high closed at N1,445, reflecting a slight decline from Tuesday’s figure of N1,450. Meanwhile, the intraday low saw a more significant drop, moving from N1,200 on Tuesday to N1,299 on Thursday.

The pressure on the naira has persisted despite several measures implemented by the Central Bank of Nigeria (CBN) to boost liquidity in the foreign exchange (FX) market.

In April, the naira emerged as the best performing currency globally, supported by bullish sentiment from major international investment institutions.

“Our foreign exchange market is experiencing robust activity, with turnover reaching levels not seen in over seven years. This increase in liquidity instils confidence among investors, businesses and other partners, ensuring fluidity in their interactions with Nigeria’s foreign exchange markets,” CBN Governor Olayemi Cardoso said last month.

According to Muda Yusuf, executive director of Private Enterprise Promotion, “it might even be that we cannot afford to let the currency float, especially given the imperfections we have in the economy.”

The dollar index, a measure of the dollar’s performance against six major currencies, recorded a notable drop, hitting its lowest level since April 11 at about 105.2 index points. This downward trend marks a 1% decline for the week, indicating the possibility of the dollar experiencing its most substantial weekly loss in almost two months.