NAIRAMETRICS
The depreciation of the Naira during the month of August was exacerbated by the incapacity of Nigerian banks to meet the surging demand for dollars, leading buyers to resort to the parallel market.
However, the Central Bank of Nigeria (CBN) has articulated a strategic plan aimed at resolving the foreign exchange debt within the next two weeks.
This proactive measure holds promise for reinstating confidence in the economy, especially considering the entrenched position of the US dollar in global transactions and foreign exchange reserves, which renders its substitution with another currency a formidable challenge, notwithstanding its inherent imperfections.
This was disclosed in the Nigeria Macroeconomic and Market report for August 2023 by Comercio Partners viewed by Nairametrics.
Dollar dominance
The report noted that in the official market, August started with a bang as the Naira reached a high of N789.08/$1 on August 1st, and then later appreciated to N738.18/$1 by August 30th.
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- “This marked a depreciation of roughly 0.76% from the July closing rate of N756.94/$1, eventually settling at N762.71/$1 by month-end.
- “The Naira’s erratic behaviour left both investors and market observers scratching their head
Pressures
They added that Naira faced a sharp decline, weakening to N930 to 1 dollar in the unofficial foreign exchange market, known as the parallel market, as the US dollar steadied near six-month highs.
