Naira Depreciates By 0.63%, Trades At ₦1,610/$ At Parallel Market

The naira, on Monday witnessed a depreciation, trading at ₦1,610 against the dollar in the parallel market.

This marks a 0.63 percent decline from the ₦1,600/$ rate observed on March 15.

Despite this dip, bureau de change operators (BDCs) in Lagos are adapting to the fluctuating rates, buying dollars at ₦1,580 and selling at ₦1,610, thus maintaining a profit margin of N30.

Conversely, in the official FX market, the naira showcased resilience on March 18, gaining 1.86 percent to settle at ₦1,572.86, up from ₦1,602.75/$ on March 15.

This disparity between the official and parallel market rates highlights the ongoing volatility and complexities in Nigeria’s foreign exchange landscape.

Amid these fluctuations, optimistic forecasts have emerged regarding the naira’s trajectory.

Financial analysts and market observers are closely watching the impact of President Bola Tinubu’s administration’s economic reforms, anticipating a positive shift in the currency’s valuation.

Notably, a projection by Goldman Sachs on March 10 suggested that the naira could strengthen to ₦1,200 against the dollar in the forthcoming 12 months, signaling potential recovery and stabilization.

This development in the forex market is being keenly monitored by investors, businesses, and policymakers, given its significant implications for Nigeria’s economic landscape.

The naira’s performance in both the parallel and official markets continues to be a focal point of discussion, reflecting broader trends in the nation’s financial health and the effectiveness of ongoing economic policies.

Goldman said, “We think the Naira looks cheap on a REER basis in a historical context. Added to this, the current account surplus was +3.5% of GDP in 2023Q3, and we expect it to increase above +5.0% on the recent FX moves and associated import compression.

“We thus see reason for the Naira to be undervalued, and we see it appreciating to 1200 within the next 12 months.”

Similarly, on December 18, 2023, Bismarck Rewane, chief executive officer (CEO) of Financial Derivatives, said Nigeria’s exchange rate is expected to appreciate as inflation drops in the year.