The Nigerian naira experienced a notable decline on Monday, weakening by 2.31 percent or N38.12 to close at N1690.37 per dollar at the National Autonomous Foreign Exchange Market (NAFEM).
Data from the Financial Markets Dealers Quotations (FMDQ) revealed that daily turnover in the foreign exchange market fell to $173.14 million, reflecting a sharp 42 percent decrease from Friday's $296.63 million.
In the parallel market, the naira showed slight recovery, closing at N1,735 to the dollar, an improvement from N1,740 in the prior trading session.
Despite this recent fluctuation, the naira had appreciated by 159 basis points last Friday compared to the previous week, when it closed at N1652.25 per dollar.
Activity levels within the NAFEM segment surged, with average turnover increasing by 154.6 percent week-on-week to reach $527.5 million.
On a broader economic scale, Nigeria's foreign reserves saw a modest increase of 0.5 percent week-on-week, now standing at $40.2 billion as of November 13, marking the highest level since January 2022.
However, projections regarding the naira's future remain grim. Veriv Africa's Nigeria Macroeconomic Outlook for 2025 suggests that volatility will persist in the exchange rate, extending challenges for the local currency into next year.
The report highlights that Nigeria's failure to meet its crude oil production quota of 1.5 million barrels per day has adversely affected its trade balance and further strained the naira. Speculation is expected to continue influencing exchange rate dynamics in 2025.
Veriv Africa warns that high inflation rates are likely to dampen non-oil exports, exacerbating the naira's depreciation.
The report emphasizes that without significant improvements in foreign exchange inflows and external reserves, the naira's lacklustre performance this year could repeat in 2025.
