Over the weekend, the Nigerian naira exhibited signs of improvement against the US dollar, appreciating by N125 to reach N1,275/$1, representing a 9.8% increase compared to its previous rate of N1,400/$1 at the close of trading on Friday. This positive development comes amidst concerns over the currency’s continuous depreciation and instability.
Currency traders in the popular Wuse Zone 4 market attributed the fluctuations in the exchange rate to trading uncertainty, emphasizing the need for government intervention to either increase the currency value or devalue it for market stability. The absence of trading activity on Sunday further underscored the challenges faced by traders due to the naira’s instability.
Malam Yahu Ibrahim, a trader, expressed concerns about the risks associated with trading the naira and urged the government to take decisive action to address the currency’s fluctuation, which he argued was detrimental to businesses.
The recent appreciation of the naira coincides with plans by the Association of Bureaux De Change Operators of Nigeria (ABCON) to unify the retail end of the foreign currency market. ABCON President Aminu Gwadabe highlighted that this move aims to tackle volatility and enhance regulatory compliance within the market segment.
However, despite this marginal gain, the naira had experienced a 26.2% loss in two weeks prior to the appreciation, raising concerns about its stability. The Central Bank of Nigeria’s approval of $15.83 million allocation to 1,583 BDC operators aimed to enhance liquidity in the unofficial market but did not fully address the currency’s depreciation.
Meanwhile, at the official foreign exchange window, the naira continued its downward trend, closing at N1,339/$ on Friday, indicating a full week of depreciation. The Senate, through its Committee on Finance, responded to the currency’s depreciation by calling for concerted efforts from all stakeholders to rescue and sustain its stability.
Senator Sani Musa, the Committee Chairman, emphasized the need for proactive measures to safeguard the naira’s stability amidst significant economic challenges. He underscored the importance of addressing the root causes of the currency’s depreciation and outlined the committee’s commitment to implementing effective policies and strategies.
In conclusion, while the recent appreciation of the naira offers a glimmer of hope, the Senate’s call for stability reflects the ongoing concerns about the currency’s volatility and the need for comprehensive measures to address its depreciation and ensure economic stability.