Naira loses weight against U.S. Dollar in unofficial market

The Nigerian naira has taken a hit, weakening to N1,561 against the American dollar in the black market.

This decline comes as demand for the dollar surges in West Africa’s largest economy.

Just last week, the naira was trading at N1,500 per dollar in the unofficial market, but it’s since slipped to its current low.

Interestingly, the official market tells a slightly different story. According to Central Bank of Nigeria (CBN) data, the naira closed at N1,512 per dollar on Thursday.

Bismarck Rewane, managing director of Financial Derivatives Company Limited, attributes the naira’s weakness to an imbalance between foreign exchange demand and supply. “Some adjustments are unavoidable when a currency is misaligned from its fair value,” he noted.

The Nigerian foreign exchange market remains volatile, with foreign investors withdrawing a whopping N455.62 billion from the Nigerian stock market in 2024. This exceeds the total inflows and has raised concerns about investor confidence. Market analysts point to the naira’s instability and inflation as major factors contributing to this uncertainty.

NGX data reveals that foreign transactions totaled N852.03 billion for the year, with outflows accounting for 53.47% of the total value, while inflows stood at N396.41 billion.