Data obtained from the official trading platform of the FMDQ Exchange on Tuesday indicated that Nigerian currency, the Naira experienced a decrease of 83 kobo, translating to a 0.06 per cent loss compared to the previous trading day on Monday when it was valued at N1,476.12 to the United States dollar.
The volume of currency traded also saw an increase, reaching $236.99 million from the $121.87 million recorded on Monday.
In the Investor’s and Exporter’s (I&E) window, the Naira was exchanged at rates ranging between N1,500.00 and N1,362.15 against the dollar.
It is worth noting that the exchange rate is important for Nigerians who import goods or services from abroad, as they need more Naira to pay for these items.
It can also impact businesses that trade internationally.
It is no longer news that currency exchange rates fluctuate all the time, so the Naira-to-Dollar rate you see today may not be the same tomorrow.
A matter of concern, however, is that a weaker Naira means it takes more Naira to buy the same amount of Dollars.
This inflates the cost of imported goods, from raw materials for factories to finished products on store shelves. Businesses struggle to absorb these rising costs.
Consumers end up paying more for imported goods, leading to inflation. If businesses can’t raise prices, their profit margins shrink, potentially hurting their ability to operate.
Also, the unpredictable exchange rate makes planning for imports a nightmare. Businesses can’t be sure how much Naira they’ll need for future purchases.
Another matter of concern is that uncertain costs make long-term investment and budgeting a challenge.