The Naira faced a continued downturn yesterday, falling in value at both the official and parallel markets. At the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, the Naira closed at N1,520.40/$1, a significant loss of N42.29 compared to Monday’s close of N1,478.11/$1.
In the parallel market, the Naira also depreciated, ending the day at N1,535/$1, down by N50 from the previous day’s rate of N1,484/$1. Additionally, the daily turnover saw a sharp decline, dropping 40.85 percent to $128.76 million from Monday’s $217.64 million. The highest spot rate observed was N1,568, while the lowest was N1,350.
Dele Oye, National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), voiced concerns over the Naira’s sharp depreciation, highlighting its adverse effects on import costs and inflation. He called for government intervention to stabilize the Naira, suggesting that pegging and defending the currency might be necessary.
“The significant depreciation of the Naira to N1,500 per dollar presents numerous challenges for Nigeria. The weakened currency raises import costs, influencing the prices of everything from food to electronics, which fuels inflation and diminishes the purchasing power of Nigerians, especially those on fixed incomes,” Oye explained.
He also noted that higher import costs increase production expenses for sectors reliant on foreign materials, affecting overall business operations. Additionally, government and business foreign debt servicing costs rise as more Naira is needed per dollar, straining financial resources and potentially reducing public service funding. Although a weaker Naira could attract foreign investment by making assets cheaper, it might also deter investors seeking stability.
On a positive note, Oye pointed out that a devalued Naira enhances the competitiveness of non-oil exports like agriculture and manufacturing on the global market. However, he stressed that this benefit is contingent on the country’s ability to efficiently increase production.
“Economic uncertainty domestically discourages consumer spending and confidence. For households receiving foreign remittances, the value of received funds increases, offering some relief. Conversely, expenses for foreign travel and education escalate, impacting affordability,” he added.
Given these complexities, Oye advised that the government should stabilize the Naira by potentially pegging and defending it, a strategy employed by economically stronger nations such as Qatar and Saudi Arabia.
In a related development, Oye reaffirmed NACCIMA’s commitment to fostering sustainable economic ties with China and addressing challenges faced by Nigerian exporters in the Chinese market. This statement came during a visit from a delegation from Hunan Province, China, to the Abuja Chamber of Commerce and Industry (ACCI) office, as part of efforts to strengthen bilateral trade relations.
Oye, represented by ACCI President Emeka Obegolu, emphasized the need to expand the range of Nigerian agro commodities included on China’s protocol list and expressed concerns about the issuance and acceptance of letters of credit between Nigerian and Chinese banks. He highlighted the importance of dialogue to resolve issues surrounding financial instruments critical to international trade.
NACCIMA is committed to working closely with the Hunan delegation and other stakeholders to forge a more inclusive trade agreement benefiting Nigerian exporters and Chinese importers, supporting the establishment of a Nigerian business presence in Hunan.
“NACCIMA remains dedicated to enhancing its role in advancing commerce and industry within Nigeria and in its international engagements, particularly with China,” Oye stated.
The Chinese delegation, led by Shen Yumou, Director General of the Department of Commerce of Hunan Province, included government officials, business leaders, and representatives from the Bank of China. They were joined by NACCIMA Coordinator in China and Chairman of Zeenab Foods Limited, Dr. Victor Ayemere.
Yumou acknowledged the strength of the bilateral relationship and expressed a willingness to enhance cooperation as part of the broader China-Africa Initiative. He announced the upcoming China-Africa Economic Trade Expo in Nigeria in November 2024 and promised further collaboration with NACCIMA.
The meeting concluded with a commitment to ongoing dialogue and collaboration, symbolized by a group photo representing the shared vision of prosperity and strong economic ties between Nigeria and Hunan Province.
