The Nigerian naira continued its downward trend against the United States dollar on Thursday, with worrying signs of a deeper plunge. At the official market, the Naira stumbled to N1,309 against the dollar, while at the parallel market, it nosedived further to N1,420.
Currency traders at the vibrant Wuse Zone 4 market revealed alarming figures, indicating a substantial gap between buying and selling rates. They reported buying the dollar at N1,340 and selling it at a staggering N1,420, pocketing a significant profit margin of N80.
Malam Yahu Abubakar, a seasoned trader, voiced concerns over the relentless slide, attributing it to surging demand for the greenback.
He 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.”
Adding to the apprehension, Abubakar Taura, echoed worries among traders regarding potential drastic measures by the Central Bank of Nigeria (CBN) to stabilize the dollar. Taura cautioned, “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.”
The rapid depreciation of the naira paints a grim picture, with a staggering 26.2% decline in just two weeks, compared to N1,125 per dollar recorded on April 12, 2023, in the parallel market.
Earlier initiatives by the Central Bank of Nigeria to inject liquidity into the market seem to have fallen short. Despite allocating $15.83 million to 1,583 BDC operators this week, aimed at bolstering liquidity in the unofficial market, concerns persist.
The CBN’s letter to BDCs announced the allocation of $10,000 to operators nationwide at a rate of N1,021 per US dollar, with hopes of stabilizing the forex market and ensuring accessibility of foreign currency to eligible end-users.