The Nigerian Naira has significantly declined versus the US dollar, despite recent intervention efforts by the Central Bank of Nigeria to resolve foreign currency backlogs and rebuild confidence. The Naira closed at N996.75 per dollar on the official market, but the parallel market recorded an exchange rate of N1090 per dollar, a new low and stoking fears about the currency’s stability.
On Thursday, the Naira recorded a notable N122.04 loss, reflecting a 12.24% decline compared to the previous day’s closing rate of N874.71. This represents a new all-time low, surpassing the previous record of N993.8 on October 30th.
Forex turnover at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) window experienced a substantial increase of 101.32%, reaching $228.54 million at the close of Thursday’s trading.
In the parallel market, there was a 5.5% depreciation, with an exchange rate quoted at N1090/$1. The narrowing gap between the official and black market rates, approximately N100, signifies a nearly 10% premium, a margin deemed acceptable in financial circles.
Financial experts, as reported by Nairametrics, are urging the Central Bank of Nigeria to implement decisive strategies to counteract the continuous depreciation of the Naira. Dr. Biodun Adedipe, founder of B. Adedipe Associates Limited, advocates for the de-dollarization of the economy by prohibiting local transactions in US dollars and selling crude oil to local refineries in Naira.
Addressing concerns about the stability of the economy as official and parallel market exchange rates converge, demands for transparency in transactions within the Investors and Exporters Window are escalating. Calls for broader market reforms are gaining momentum.
Aminu Gwadabe, President of the Association of Bureau de Change Operators of Nigeria (ABCON), warns currency speculators of impending consequences, asserting that the CBN is prepared to counteract hoarding and substituting Naira for other currencies. He views this as a positive development, emphasizing the risks associated with speculating, hoarding, and substituting the Naira with other currencies.