The Nigerian Naira continued its downward spiral against the U.S. dollar, exchanging at ₦1,540.57 per dollar at the official market on Monday.
The drop comes amid rising demand for foreign exchange, leaving businesses and importers scrambling for dollars.
The Central Bank of Nigeria (CBN) has been pumping dollars into the market to stabilize the local currency, but the supply remains inadequate. Last week, the exchange rate depreciated by ₦18.95, closing at ₦1,536.89 before weakening further on Monday.
At the black market in Lagos, traders bought dollars at ₦1,560 and sold them at ₦1,570. “The demand is rising, but there aren’t enough dollars to meet it,” said a forex trader in Lagos.
Low Dollar Supply and Growing Demand
Experts say the demand pressure is worsened by factors like import dependency and recent failed Crude-For-Naira policy with Dangote Refinery which has compelled the refinery to sell its refined products in dollars to the domestic buyers. “This will push marketers to source more forex, further driving up exchange rates,” said economist Dr. Marcel Okeke.
CBN sold $92.1 million last week, bringing total FX sales to $230.9 million. However, external reserves remain unstable, limiting CBN’s ability to intervene effectively. “The Naira is under pressure, and without improved dollar inflows, stability will be hard to maintain,” Okeke added.
The unification of Nigeria’s forex markets initially narrowed the gap between the official and parallel rates, but recent fluctuations have reopened disparities. Importers and businesses now struggle to secure forex, leading to inflationary concerns.
“Importing fuel is now our reality, and marketers are competing for the limited dollars available,” said an oil industry analyst. “If this continues, expect further naira depreciation.“
Okeke urged the government to boost dollar inflows by increasing exports, improving investment inflows, and stabilizing forex policies. “If we don’t tackle the root causes, we’ll keep seeing these fluctuations,” Okeke warned.
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