By Milcah Tanimu
The naira has depreciated further against the US dollar in the foreign exchange markets. On Tuesday, January 14, 2024, data from FMDQ Securities revealed a slight dip in the naira’s value in the official market, reaching N1,549.65/$1, down from N1,548.89/$1 in the previous session.
The depreciation also extended to the Nigerian Autonomous Foreign Exchange Market (NAFEM), with the currency continuing to face pressure. However, there is optimism for the naira as the Nigerian government is expected to receive more dollar earnings from oil exports in the coming days.
In the parallel (black) market, forex traders also reported a slight depreciation in the naira, with some selling the dollar for N1,656, compared to N1,658 in the previous day. The Nigerian Central Bank (CBN) has shown that oil price increases could provide more dollar liquidity, which is crucial for defending the naira.
Experts like Tilewa Adebajo, CEO of CFG Advisory, caution that Nigeria needs fiscal discipline to avoid further declines. Adebajo warns that without sound policies, the naira could potentially reach N2,000 to the dollar.
In a related development, Nigeria’s foreign reserves have reached a four-year high of $40.92 billion, reflecting a $606 million increase in just one month. This growth in reserves may offer a cushion for the currency in the face of fluctuating exchange rates.
As Nigeria seeks to boost oil production, economists emphasize the need for coordinated economic reforms to stabilize the naira and secure long-term growth.
