The exchange rate dynamics between the Nigerian naira and the US dollar marked a tumultuous week, reaching a peak of N955/$1 on the parallel market.
Forex traders in key locations such as Lagos and Abuja reported this fluctuation, indicating the challenging conditions prevailing in the currency market.
Commencing the week at N895/$1, the exchange rate experienced a decline to N900/$1 on August 9th, establishing a record low. This month, the naira has depreciated by 8%, primarily due to demand surpassing supply.
Notably, other major currencies also saw declines. The euro and the UK pound both experienced weakened exchange rates:
- Euro: N1,025/EUR1
- Dollar: N955/$1
- Pound: N1,180/£1
Meanwhile, official rates diverged, closing the week at N740.6/$1, an increase from the N743/$1 recorded on August 4th.
The discrepancy between official and parallel market rates widened to N210/$1, suggesting a growing disparity that raises questions about the alignment between official policies and real-world currency dynamics.
The day’s trading exhibited significant variance, with highs and lows reaching N799.9/$1 and N738/$1 respectively, further underscoring the divergence from the parallel market.
In a related context, the Central Bank of Nigeria (CBN) attributed the naira’s decline against the dollar and its challenges in managing the foreign exchange market to the diversion of diaspora remittances to unofficial markets, particularly the parallel market.
Folashodun Shonubi, the acting Governor of CBN, conveyed this insight during a lecture titled “Diaspora Remittances and Nigeria’s Economic Development” to members of the Executive Intelligence Management Course (EIMC) 16 at the National Institute for Security Studies in Abuja.
Shonubi elaborated that a significant portion of diaspora remittances arrived in Nigeria as dollars, escaping formal documentation and subsequently funneling into the parallel market.
