The Nigerian naira has lost further ground against the United States dollar, with the exchange rate hitting N1637.59 at the close of trading on Tuesday.
According to data from the Nigerian Autonomous Foreign Exchange, the naira depreciated by N14.63 against the dollar, down from N1622.96 on Monday.
This decline marks a 0.90 per cent drop in the value of the naira against the dollar, making it more expensive for Nigerians to purchase foreign goods and services.
The FMDQ data showed the foreign exchange market witnessed a significant turnover of $143.15m, indicating a high level of trading activity.
The naira witnessed a tumultuous trading session against the dollar on Tuesday, with the spot rate closing at N1637.59, a slight appreciation of N3.61 from the opening rate.
However, the forward rate told a different story, with a high of N1,655.00 and a low of N1,499.00, indicating significant fluctuations in the market.
On Friday, local currency made a strong comeback in the official foreign exchange market, appreciating by 2.9 per cent against the dollar. This uptrend was driven by a significant increase in dollar supply, totaling $245.17m.
The naira gained ground as the dollar was traded at N1,593.32 on Friday, compared to N1,639.41 on Thursday.
Meanwhile, this development coincides with the recent drop in global oil prices, which currently sell below $70 per barrel.
Nigeria’s economy is heavily reliant on the oil sector, which generates over 80 per cent of government revenue and accounts for approximately 90 per cent of export earnings, characteristic of a mono-product economy.
Former Chief Economist of Zenith Bank Marcel Okeke told The PUNCH that the combination of pipeline vandalism, organised youth involvement, and the sudden crash in oil prices has severely endangered the oil sector, which is crucial for oil exploration and production.
“The reduction in revenue, coupled with the government’s increased borrowing from dollar-based bonds, spells disaster for the economy,” Okeke said.