Why Naira exchange rate dropped to lowest level in weeks – Traders

Bureau De Change operators have attributed the resumption of foreign schools and business activities in the country after the festive period to the depreciation of the Naira in the parallel market in recent days.

Recall that several Nigerians traveled abroad in recent years, most of whom were able to migrate through the education route, and would need to fund their school fees.

Some of these students are still being funded by their guardians or parents here in Nigeria, who would require changing their local currency into US dollar, hence higher demand

The Naira had remained stable in the last two weeks, on the backdrop of reduced demand for FX at the black market during the Christmas and New Year festivities. However, the exchange rate has resumed its downturn, trading at its lowest level in almost three weeks.

At the parallel market, the value of the naira depreciated against the US dollar, closing at N745/$1 on Monday compared to the N730/$1 before the festive seasons. It however appreciated to N742/$1 on Tuesday,

Meanwhile, the exchange rate has remained stable in the past week at the market, albeit with a depreciation compared to the previous year.

Naira has traded at an average of N461.5/$1 at the official window so far in January, while $417.1 million in FX value has exchanged hands in five trading days

According to a BDC operator in Lagos, the surge was expected considering the time of the year when parents want to send dollars to their children schooling abroad.

The FX operator who simply identified himself as Muhammed explained that at this time of the year, it is normal for the exchange rate to depreciate because some parents who want to send money to their children in foreign schools will buy dollars, as well as some Nigerians who want to pay their school fees in dollars will also be in need of FX.