The Nigerian naira closed the week on a negative note as it further depreciated at the official foreign exchange market on Friday, November 21.
The Central Bank of Nigeria (CBN) foreign exchange data indicated that the naira exchanged for N1,456.72 per dollar at the Nigerian Foreign Exchange Market (NFEM) on Friday. This reflects a N4.59 loss when compared to N1,452.13 per dollar recorded on Thursday, November 20, at the official market.
The local currency traded between a high of N1,462.00 and a low of N1,453.61 per dollar and closed at a spot rate of N1,458 on Friday.
The naira had been facing intense FX pressure since the beginning of November. It opened the month on a negative note, having depreciated to N1,436.34 against N1,421.73 recorded on October 31, the last trading day of last month. After a slight rebound on November 4 (N1,433.65) and November 7 (N1,436.57), the naira continued to weaken. It started this week with the dollar exchanging for N1,448.03 on Monday, November 17, a N5.59 loss from N1,442.43 on Friday, November 14. It further dropped to N1,447.42 on Tuesday, November 18, and N1,454.18 on Wednesday, November 19. After a slight rebound to N1,452.13 per dollar on Thursday, it returned to depreciation on Friday.
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Meanwhile, the naira was sold at N1,465 per dollar on Friday at the parallel market, also known as the black market.
On a week-on-week basis, the naira recorded a loss of N14.29 at the official market when compared with the N1,442.43 recorded on Friday, November 14.
The naira weakened despite CBN’s injection of $50 million into the foreign exchange market within the week to boost liquidity.
The apex bank reportedly pumped this lump sum into the FX market following renewed pressure on the naira due to a continued decline in FX inflows, while U.S. dollar demand for foreign payment was on the rise.
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The apex bank had been less aggressive with FX sales in recent months, as the naira appreciated and gained relative stability.
However, the continued naira plunge forced the CBN to inject dollars into the market, selling $50 million to authorised dealer banks on a willing buyer, willing seller basis to boost liquidity and stabilise the exchange rate.
The naira decline comes at a time when Nigeria’s foreign exchange reserves are experiencing an upward swing. As of Thursday, November 20, the reserves stood at $44.18 billion, up from $43.26 billion recorded at the beginning of the month.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
