The naira depreciated on the first day of the week, trading at N1,550 per dollar from the previous day’s rateThe naira started trading positively on Monday, January 20, 2025 but depreciated as demand for the dollar intensifiedHowever, the naira rose in the parallel market segment of the FX market from N1,670 to N1,650 per dollar
Henzodaily.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency began the new week on a mixed note on Monday, January 20, 2025.
The naira opened trading on Monday positively, gaining 0.13% at N1,547 per dollar in the official window.
The naira trades negatively in the official window, and rises in parallel markets
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Naira falls again in the official window
However, the naira closed trading negatively, depreciating 0.16% to trade at N1,550 per dollar.
Data from the FMDQ Exchange shows that currency dealers quoted the dollar at a high of N1,551.25 and a low of N1,44.50 in the official window.
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According to information from Naira Rates, the naira appreciated in the parallel market, trading at N1,650 per dollar, up from N1,670 the previous day.
The gap widens in the FX market
The development means that the gap between the official and parallel markets has widened by N100.
Checks show that volatility returned to the forex markets as demands for the US dollar increased after the Yuletide.
A forex trader, Abbas Yusuf, told Henzodaily.ng that the parallel market is experiencing heightened demand after the Christmas and New Year holidays.
“Most dollar demands come from IJGBs who want to return after the holidays, so we have been receiving requests from people who want to travel,” he said.
Yusuf asked the Central Bank of Nigeria (CBN) to intervene again in the FX markets to forestall further naira depreciation.
External reserves decline in two weeks
Meanwhile, Nigeria’s external reserves, which grew in the past year, have declined sharply due to external debt servicing.
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Data from the Central Bank of Nigeria (CBN) shows that Nigeria’s external reserves fell by $320 million, a 0.8 decline in two weeks.
As of January 13, 2025, the reserves stood at about $40.56 billion, relative to $40.88 billion on January 2, 2025.
Analysts blamed the decline on two key factors: international payments like debt servicing and the CBN’s FX interventions.
Nigeria’s external debt servicing expenditures stood at $3.6 billion in the first nine months of 2024, a 39.8% increase of $1.02 billion over the $2.6 billion spent in 2023.
Analysts lament the lack of FX intervention by CBN
The decline shows the ongoing hassles posed by Nigeria’s external debt servicing obligations and the desire to stabilise the exchange rate market.
Another reason for the depletion of the reserves is the apex bank’s intervention in the FX market, which aims to stabilise the local currency by supplying dollars to meet market demands.
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Analysts say Nigeria’s reserves are essential to its economic stability, debt servicing, naira stability, and import payments.
Janet Ogochukwu, a senior banker, told Henzodaily.ng that the CBN’s intervention in the FX market has been very weak, explaining the naira’s woeful performance in recent weeks.
“There is a clamour for a robust intervention in the forex market to forestall further naira depreciation. When your local currency is left defenceless, what is the need to stash FX?
Forex dealers, especially BDC operators, are lamenting the scarcity of forex to meet their growing demand, yet CBN is stashing it to gloat about growing reserves,” she said.
Naira tumbles in official and parallel markets
Henzodaily.ng earlier reported that the Nigerian naira maintained its week-long losing streak on Wednesday, January 15, 2025, falling by 0.09% in the Electronic Foreign Exchange Market System (EFEMS).
On January 15, 2025, the Electronic Foreign Exchange Market System (EFEMS) recorded a 0.09% drop in the naira, which opened negatively at N1,549 per dollar, the same rate it closed the previous day.
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Naira ends losing streak in official market, recovers 0.17 per cent
At the end of trading on Wednesday, January 15, 2025, the naira depreciated by 0.09% to trade at N1,551.10 per dollar.
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Source: Henzodaily.ng