Market forces that determine the value of the naira include:
1) Supply and demand
The most significant factor in determining the value of any currency is its supply and demand. If there is a high demand for naira, its value will rise, and if there is an oversupply, the value will fall.
2) Inflation rate
A high inflation rate can reduce the value of a currency, as it reduces the purchasing power of the currency.
3) Interest rates
Higher interest rates can attract foreign investment, thereby increasing the demand for the currency and making it more valuable.
4) Political stability
A country with political stability and a well-functioning government is often perceived as a safer destination for foreign investment, which can increase demand for its currency.
5) Economic growth
Strong economic growth can lead to increased demand for a currency as it indicates higher returns on investment opportunities.
All these factors play a crucial role in determining the value of the naira and can cause fluctuations in its value against other currencies.