The Naira is facing a significant depreciation trend, closing at N1,740/$1 in the parallel market over the weekend, which indicates a reversal of the gains recorded earlier this year. While the Nigerian Autonomous Foreign Exchange Market (NAFEM) rate showed slight stability at N1,600/$1, there is anticipation that the Central Bank of Nigeria (CBN) might step in to manage the increasing pressure on exchange rates.
Data from the FMDQ shows a minor gain for the Naira in NAFEM, appreciating by N1.2 from N1,601.2/$1. However, parallel market dealers foresee further depreciation, predicting a rate of N1,750/$1 by month-end and an anticipated end-of-year rate of over N1,800/$1.
The depreciation trend resumed in April after the Naira surged from N1,820/$1 in February to a low of N1,240/$1 in March. On a Year-on-Year (YoY) basis, the Naira fell by 70.5% in the parallel market, closing Q3 2024 at N1,705/$1 from an average of N1,000/$1 in September 2023. Year-to-Date (YtD), the currency has depreciated by 16.7%, dropping from N1,490/$1 in January 2024.
In the official NAFEM segment, YoY depreciation reached 104%, with the Naira slipping to N1,540.78/$1 in September 2024 from N755.27/$1 in September 2023. However, recent YoY figures indicate a 9.9% depreciation, from N1,455.9/$1 in January 2024 to N1,600/$1 last weekend.