Naira Hits Record Low at N1348/$ on Official Forex Market

The Nigerian naira plunged to an unprecedented low of N1348.63 against the US dollar on the Nigerian Autonomous Foreign Exchange Market on Monday. This reflects a staggering 51.21% decrease from the N891.90/$ rate recorded last Friday at the official market, as reported by the FMDQ Securities Exchange.

Monday’s official rate marks the weakest exchange rate recorded since the Central Bank of Nigeria adopted a floating system for the national currency in June 2023. Despite efforts by the Central Bank of Nigeria and the Federal Government to enhance liquidity in the foreign exchange market, the naira’s sharp depreciation against the dollar persists.

The parallel market also witnessed a decline, with Bureau de Change Operators reporting a further fall to N1,450/$ at the close of Monday’s trading. This comes after the naira closed at N1,420/$ on the parallel window last Friday.

Abdusallam Abubakar, a trader, stated, “If you want to buy, I’ll sell to you at N1,450/$. That’s the price for today. We buy at N1440/$.” Another operator, Magaji Mohammed, confirmed this, saying, “Dollar sells at N1450/$ today.”

Even in the cryptocurrency peer-to-peer market, the naira experienced a decline, trading for N1,429/$ on Binance’s P2P platform at the time of filing this report.

The exchange rate gap between the official and parallel markets has now narrowed to N101.37 with this new rate. Despite recent efforts, including a $2.5 billion payment by the Central Bank of Nigeria to clear forex backlogs, the naira continues its downward trend.

On Monday, the CBN paid $500 million to settle part of forex obligations, following a recent $2 billion payment for the same purpose. The bank is rumored to be owing $7 billion in FX backlogs. CBN’s spokesperson, Mrs. Hakama Sidi Ali, reassured Nigerians of the bank’s commitment to addressing foreign exchange challenges.

“The Management of the CBN is committed to settling all legitimate foreign exchange backlogs within a short time frame,” she stated. Emphasizing a comprehensive strategy, Ali added, “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.”

CBN Governor Olayemi Cardoso acknowledged the undervaluation of the naira and unveiled measures to stabilize its value. However, the ongoing depreciation is anticipated to have adverse effects on prices of goods and services in the country, as manufacturers contemplate price hikes in response to exchange rate fluctuations.