The naira has been experiencing a significant depreciation against the US dollar, with a record low of N1,537.96 per dollar at the official market and N1,650 per dollar at the parallel market ¹. This depreciation is attributed to various factors, including:
- Heavy reliance on oil exports: Nigeria's economy is heavily dependent on oil exports, making it vulnerable to fluctuations in global oil prices ².
- Weak diversification: The country's struggle to diversify its economy beyond oil exports has exposed it to oil price shocks, further fueling the naira's depreciation ².
- Exchange rate policies: Frequent changes in exchange rate policies have created uncertainty in the foreign exchange market, reducing investor confidence and putting pressure on the naira ².
- Depletion of foreign reserves: The depletion of foreign exchange reserves, especially during low oil prices, has limited the Central Bank's ability to defend the naira ².
- Rising inflation: Persistent inflation has eroded the naira's purchasing power, making it less attractive to hold and contributing significantly to its depreciation ².
These factors have resulted in a significant decline in the value of the naira, making it challenging for individuals and businesses to import goods and services. The depreciation has also led to higher prices for everyday essentials, affecting the purchasing power of consumers ².
“Naira continues to depreciate against dollar - Daily Post Nigeria”
- Heavy reliance on oil exports: Nigeria's economy is heavily dependent on oil exports, making it vulnerable to fluctuations in global oil prices ².
- Weak diversification: The country's struggle to diversify its economy beyond oil exports has exposed it to oil price shocks, further fueling the naira's depreciation ².
- Exchange rate policies: Frequent changes in exchange rate policies have created uncertainty in the foreign exchange market, reducing investor confidence and putting pressure on the naira ².
- Depletion of foreign reserves: The depletion of foreign exchange reserves, especially during low oil prices, has limited the Central Bank's ability to defend the naira ².
- Rising inflation: Persistent inflation has eroded the naira's purchasing power, making it less attractive to hold and contributing significantly to its depreciation ².
These factors have resulted in a significant decline in the value of the naira, making it challenging for individuals and businesses to import goods and services. The depreciation has also led to higher prices for everyday essentials, affecting the purchasing power of consumers ².
“Naira continues to depreciate against dollar - Daily Post Nigeria”
