Naira Plummets Amid Fuel Price Hikes by NNPCL

The naira has continued its downward trajectory against the U.S. dollar in the foreign exchange market, coinciding with another round of fuel price increases by the Nigerian National Petroleum Company Limited (NNPCL). The adjustment in fuel prices further exacerbates the economic conditions as this year has already witnessed several spikes in the cost of Premium Motor Spirit.

According to the Financial Market Dealers Quotations (FMDQ), the naira experienced a notable depreciation, closing at N1625.13 per dollar on Wednesday. This figure marks a drop from the N1561.76 recorded on Tuesday, representing a depreciation of N63.37 within a day. The trend comes after the naira had made some slight gains on Tuesday, appreciating by N73.39 against the dollar.

Simultaneously, the naira’s value depreciated in the black market, where it fell to N1895 per dollar from N1780 the previous day. The foreign exchange market also experienced a downturn in activity, with turnover declining significantly. Daily transactions dropped to $170.60 million on Wednesday from the $253.68 million registered on Tuesday.

In response to the escalating fuel costs, the NNPCL announced a recent increment, raising the price of petrol to N1030 per litre from N898 per litre. This change marks the second consecutive increase in September 2024. An industry insider, preferring anonymity, remarked, “The back-to-back price hikes will likely add more pressure on the already volatile exchange rate.”

A market analyst highlighted the situation by saying, “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.”