On Monday, the naira hit an all-time low of N1348.63 per dollar on the Nigerian Autonomous Foreign Exchange Market.
According to data from the FMDQ Securities Exchange, this represents a 51.21 percent drop from the national currency’s official market closing rate of N891.90/$ last Friday.
Monday’s official exchange rate is the lowest the country has seen since the Central Bank of Nigeria launched the national currency in June 2023.
The naira had closed above N1000/$ on the official window. On December 8, the naira dropped to an all-time low of N1,099.05 per dollar. On December 28, 2023, it ended at N1043.09/$, followed by N1035.12/$ on January 3, 2024. On January 9, 2024, it closed at N1089.51/$, then at N1082.32/$ on January 10, 2024.
The naira’s sharp fall against the dollar is resisting efforts by the Central Bank of Nigeria and the Federal Government to increase liquidity in the foreign currency market.
The national currency is likewise not doing well in the parallel window of the foreign exchange market. According to Bureau de Change Operators, the naira fell further to N1,450/$ after the close of business on Monday. On Friday, the naira closed at N1,420/$ in the parallel window.
Abdusallam Abubakar, a dealer, told The PUNCH, “If you want to buy, I’ll sell to you for N1,450 each dollar. This is the price for today. We buy for N1440/$.”
Another operator, Magaji Mohammed, confirmed Abdusallam’s statement, “Dollar sells at N1450/$ today.”
The naira also suffered in the bitcoin peer-to-peer market, trading at N1,429/$ on Binance’s P2P platform as of the time of this story. According to Chainalysis, a blockchain business, Nigeria has one of the highest peer-to-peer trading volumes in the world.
With this new rate, the exchange rate difference between the official and parallel markets has shrunk to N101.37. The current slide in the naira comes despite the top bank’s recent payment of $2.5 billion to resolve currency backlogs.
On Monday, the CBN paid $500 million to settle part of its forex commitments. This comes after a recent $2 billion payout for the same purpose. The bank is said to owe $7 billion in FX backlogs.
Mrs. Hakama Sidi Ali, the apex bank’s spokesman, disclosed the $500 million payment in Abuja on Monday.
She went on to say, “The Management of the CBN is committed to settling all legitimate foreign exchange backlogs within a short time frame.”
Sidi Ali told Nigerians that the CBN is undertaking a comprehensive strategy to increase cash flow in Nigeria’s foreign exchange markets throughout the short, medium, and long term.
“As the governor said, the CBN’s focus is on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years,” she went on to say.
While announcing some of the CBN’s moves to save the naira, Governor Olayemi Cardoso revealed that the naira is currently undervalued.
The sustained slide of the naira is projected to have a detrimental impact on the country’s prices for products and services. Manufacturers recently informed The PUNCH that they would raise commodity prices in reaction to exchange rate changes.