Naira Hits Record Low of N1,700/$1 in Parallel Market
Samuel Mobolaji
The Nigerian naira has fallen to a new low, closing at N1,700 per dollar in the parallel market on October 14, 2024, as reported by Bureau de Change (BDC) operators.
This decline marks a 0.29% drop from its previous rate of N1,695/$1 recorded on October 11, despite a rise in crude oil prices, which have exceeded $80 per barrel.
While the naira weakened in the parallel market, it showed relative stability in the Investors and Exporters (I&E) window, closing at N1,641.27/$1. However, this still represents a 1.14% depreciation from the prior rate of N1,622.57/$1.
The growing gap between the official and parallel market rates highlights the ongoing economic pressures facing Nigeria’s foreign exchange system.
The naira has experienced consistent depreciation throughout 2024, losing over 50% of its value since January when it traded at N907.11/$1. By October, the currency had crossed the N1,500/$1 threshold and reached its previous record low of N1,616.53/$1 in February.
A brief recovery in March saw it rebound to N1,303/$1, but it has since continued to decline, closing at N1,668.97/$1 by the end of September.
On October 14, the naira opened at N1,695 per dollar in the parallel market but slipped to N1,700/$1. In the I&E window, the currency had closed at N1,641.27/$1 on October 11, down by 1.15% from the previous day’s rate of N1,622.57/$1.
During trading in the I&E window, the naira exhibited significant volatility, reaching a high of N1,675.00/$1 and a low of N1,591.00/$1, ultimately settling at N1,641.27/$1. Trading volumes surged in the I&E window, totaling $616.73 million, compared to just $145.56 million the previous day, indicating increased activity and demand for dollars.
Several macroeconomic factors are driving Nigeria’s exchange rate crisis. Despite rising global oil prices, which typically boost foreign exchange inflows for oil-dependent economies like Nigeria, the naira continues to weaken, likely exacerbated by dollar shortages, inflation, and dependence on the parallel market for currency.
Although Nigerian crude is trading above $80 per barrel, concerns remain regarding weaker energy demand from China.
James Tor, National Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), has suggested that petrol prices could decline following the federal government’s decision to permit marketers to purchase fuel directly from the Dangote refinery and other suppliers, potentially reducing import dependency.
However, its overall trajectory will depend on the broader macroeconomic environment, including inflationary trends and the supply of foreign currency.
As Nigeria navigates these challenges, the effectiveness of policy responses will be critical in determining whether the naira can stabilize or if further depreciation lies ahead.
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