The naira fell to an all-time low of N1348.63/$ on the Nigerian Autonomous Foreign Exchange Market on Monday 29th of January.
Monday’s official rate is the worst official exchange rate the country has recorded since the Central Bank of Nigeria floated the national currency in June 2023.
This signifies a 51.21 per cent fall from the N891.90/$ the national currency closed last Friday at the official market, according to data from the FMDQ Securities Exchange.
The naira had closed above the N1000/$ on the official window. On December 8, the naira first fell to an all-time low of N1,099.05/$. On December 28, 2023, it closed at N1043.09/$, and N1035.12/$ on January 3, 2024. On January 9, 2024, it closed at N1089.51/$ and N1082.32/$ on January 10, 2024.
This steep depreciation of the naira against the dollar is defying efforts by the Central Bank of Nigeria and Federal Government to boost liquidity in the foreign exchange market.
The national currency is also not faring better on the parallel window of the foreign exchange market. According to Bureau de Change Operators, the naira further fell to N1,450/$ as of the end of trading on Monday. On Friday, the naira closed at N1,420/$ on the parallel window.
A trader, Abdusallam Abubakar, told newsmen, “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, corroborated Abdusallam, “Dollar sells at N1450/$ today.”
The naira also took a beating in the cryptocurrency peer-to-peer market, trading for N1,429/$ on Binance’s P2P platform as of the time of filing this report. According to Chainalysis, a blockchain firm, Nigeria has one of the largest peer-to-peer exchange volumes in the world.
With this new rate, the exchange rate gap between the official and parallel markets has now narrowed to N101.37. The recent fall of the naira is despite the recent payment of $2.5bn by the apex bank to clear forex backlogs.
On Monday, the CBN paid $500m to clear part of forex obligations. This is following a recent $2bn payment for the same purpose. The bank is rumoured to be owing $7bn in FX backlogs.
The apex bank’s spokesperson Mrs. Hakama Sidi Ali revealed the $500m payment in Abuja on Monday.
She said, “The Management of the CBN is committed to settling all legitimate foreign exchange backlogs within a short time frame.”
Sidi Ali assured Nigerians that the CBN is implementing a comprehensive strategy to improve cash flow in the Nigerian foreign exchange markets in 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 added.
While announcing some of the moves of the CBN to save the naira, the CBN governor, Olayemi Cardoso, revealed that the naira is currently undervalued.
The continued fall of the naira is expected to negatively impact the prices of goods and services in the country. Manufacturers recently told newsmen that there might be a hike in the prices of commodities in the market in response to the exchange rate fluctuations.