Naira Loses 23% of Its Value Against Dollar in Q3 Amid Forex Crisis

The Naira suffered a significant depreciation of at least 23 per cent against the US dollar in the third quarter of 2023, according to an analysis of the foreign exchange market data.

The period witnessed the persistent instability and volatility of the Naira at the forex market despite the liberalization reforms introduced by the Central Bank of Nigeria (CBN) on June 14th.

The data from FMDQ foreign exchange rate showed that the official rate at the end of Q3 was N755.27/$1, a drop from N769.25/$1 at the end of Q2.

Meanwhile, at the parallel market, Naira plummeted from N770/$1 exchanged in Q2 to N1000/$1 at the end of Q3, resulting in a staggering 23 per cent depreciation.

The development comes when the external reserves have slipped from $34.1 billion at the end of Q2 to $33.2 billion, raising further questions about Nigeria’s economic stability.

Speaking with Newsflash Nigeria on Wednesday, Idakolo Gbolade, Chief Executive Officer of SD & D Capital Management, said speculative activities around the forex market and the Federal Government’s inability to generate enough FX have been the reason for the continued decline in the value of the Naira in Q3.

According to him, CBN’s perceived silence as the main regulator had also exacerbated the reign of profiteering in the forex market to the detriment of the country’s currency.

He urged that the Federal Government, through the CBN, must move quickly to avert the country’s forex market crisis by tightening the regulatory belt around operators.

“The speculative activities around the foreign exchange market, coupled with the inability of the Federal Government to generate enough FX to intervene in the market, have been the major cause of the continuous decline in the value of the Naira.

“The perceived silence of the CBN’s main economic regulator has given free rein to excessive profiteering in the forex market.

“The present position of the Naira to the US dollar was predicted about three months ago, but unfortunately, nothing was done to stem the tide.

“The Federal Government, through the CBN, needs to move quickly to salvage the situation with both fiscal and monetary policies before it becomes a major policy failure of this administration.

The CBN should also tighten its regulatory belt around the operators in the market to check excessive profiteering,” he said.

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