The naira continues to decline against the dollar in the foreign exchange market, driven by another round of fuel price hikes implemented by the Nigerian National Petroleum Company Limited (NNPCL). This adjustment marks yet another increase in the pump price of Premium Motor Spirit (PMS) this year.
According to data from the Financial Market Dealers Quotations (FMDQ), the naira closed at N1625.13 per dollar on Wednesday, a significant drop from N1561.76 the previous day, representing a depreciation of N63.37.
This decline follows a brief period of recovery, where the naira appreciated by N73.39 against the dollar on Tuesday. However, on Wednesday, the currency’s fortunes reversed, also experiencing a decline in the black market, where it fell to N1895 per dollar from N1780.
Furthermore, the turnover in the foreign exchange market saw a decrease, with daily transactions dropping to $170.60 million on Wednesday from $253.68 million on Tuesday.
In response to the rising fuel costs, the NNPCL announced an increase in petrol prices, raising it to N1030 per litre from N898, marking the second consecutive hike in September 2024. An industry insider expressed concerns about the potential impact of these price hikes, stating, “The back-to-back price hikes will likely add more pressure on the already volatile exchange rate.”
A market analyst added, “We’re seeing the direct impact of NNPCL’s fuel price adjustments on the naira. With each increase, businesses and consumers face higher costs, which in turn affects demand for foreign exchange.”
