The week concluded with a turbulent performance in the exchange rate between the Nigerian naira and the U.S. dollar, reaching a peak of N955/$1 on the informal market.
This data is gathered from significant forex traders in Lagos and Abuja.
At the outset of the week, the exchange rate began at N895/$1 but subsequently dropped to N900/$1 on August 9th, marking a historic low. With a continuous demand-supply mismatch, the exchange rate has experienced an 8% depreciation this month.
In addition to the dollar, the exchange rates for the Euro and the UK Pound also weakened:
– Dollar: N955/$1
– Pound: N1,180/£1
– Euro: N1,025/EUR1
Although the parallel market rates have been declining, the official rates concluded the week at a higher point of N740.6/$1, compared to N743/$1 on August 4th.
This widening gap of N210/$1 between the official and parallel market rates suggests a significant disparity.
The intraday fluctuations ranged from N799.9/$1 to N738/$1, further emphasizing the contrast with the black market rates.
Addressing the situation, the Central Bank of Nigeria (CBN) attributed the naira’s decline against the dollar and its struggle in managing the foreign exchange market to the diversion of diaspora remittances to unofficial platforms, such as the parallel market.
This insight was shared by Folashodun Shonubi, the acting Governor of CBN, during a lecture titled “Diaspora Remittances and Nigeria Economic Development” at the National Institute for Security Studies, Abuja. Shonubi elucidated that many diaspora remittances arrive in Nigeria as dollars and remain undocumented, ultimately entering the parallel market.
