The foreign exchange (FX) market closed on Monday with naira losing its value against the dollar by 4.26% due to low dollar liquidity.
Low liquidity means low transactions by FX market dealers as a result of dollar scarcity.
The market liquidity, which represents the volume of transactions or the daily market turnover declined by 62.02% to $45.98 million on Monday from $121.08 million recorded on Friday, data from the FMDQ indicated.
Consequently, the naira depreciated by 4.26% as the dollar was quoted at N774.78/$1 on Monday as against N743.07/$1 quoted on Friday at the Investors’ and Exporters’ (I&E) forex window.
FX market dealers who participated in the auction on Monday maintained bids as high as N799/$1 and a lower bid of N475/$1.
At the parallel market, the naira steadied at N895, the lowest value ever recorded in the foreign exchange market.
The Nigerian foreign exchange market continues to face challenges with the naira’s depreciation against the greenback even as the oil market continues to show buoyancy with prices rising on global supply concerns.
According to a report, last week, the naira experienced depreciation against the US dollar at the parallel market, sliding by N14 or 1.61% week-on-week to N881/$1 from N867/$1.
The decline was attributed to the persistent dollar shortage and speculative activities, while manufacturers and importers continued to seek easier access and availability of dollars.
Some analysts have projected that in the coming week, the naira may trade in a relatively calm band across the FX markets barring any market distortions that may disrupt supply.
cc: Business Day.