On Wednesday, August 9, the Nigerian Naira experienced a notable decline, reaching an exchange rate of N782.38 to one US dollar within the market-driven Investors and Exporters (I&E) window.
This recent devaluation of the Naira has been attributed to a combination of factors, primarily the increasing accumulation of unfulfilled demand for dollars and a scarcity of the US currency in both the official and retail sectors of the market.
Reports from The Nation indicate that there is a substantial backlog of approximately $8 billion in pending dollar demand within the official market. This accumulation of unmet requests for dollars has played a significant role in the ongoing depreciation of the Naira, exacerbating the scarcity of the US dollar across different segments of the market.
Moreover, the parallel market has not been immune to the effects of this dollar scarcity. The devaluation of the Naira has been particularly pronounced in this unofficial market, where the exchange rate has reached as high as N900 per US dollar. This underscores the critical impact that the shortage of dollars is having on the Naira’s value in various market sectors.
It’s worth noting that the turnover of dollars within the official market has also experienced a decline, with a reported turnover of $45 million. This decrease in supply within the official market has contributed to the diversion of a significant portion of dollar demand towards the parallel market, further straining the Naira’s value and exacerbating the overall dollar scarcity situation.
the recent depreciation of the Nigerian Naira to N782.38 per US dollar within the I&E window can be attributed to a confluence of factors, including the mounting backlog of unfulfilled dollar demand and the scarcity of the US currency across both official and unofficial market segments. This has led to a broader impact on the Naira’s value, with the parallel market witnessing even higher rates of Naira devaluation, reaching N900 per US dollar.