The lack of foreign currency inflows and associated issues is making exchange rates worse, meaning there is no relief for the local currency in Nigeria. Despite efforts to stabilize currency rates, distortion has left the Naira mired in a messy foreign exchange crisis.
Due to the actions of speculators who aim to profit short-term from unfavorable fluctuations in exchange rates, Nigeria’s import demand and foreign currency supply remain out of balance despite all the steps implemented by the apex bank. Elites maintain their money in foreign currencies, and the economy is partially dollarized. If it meant earning more money, the majority of Nigerians would wager against the naira.
Nigeria’s unsettling devaluation hasn’t accomplished anything and has just made matters worse for those who haven’t profited from the nation’s economic policies, raising questions about the effectiveness of the programs. Following the worst depreciation during the present administration, the naira’s official window rate is locked at N1500, with little chance of an increase.
Despite the monetary battle to keep the naira steady, the exchange rate fell throughout the foreign markets on Thursday. The government, acting through the central bank, prevented cryptocurrency exchange platforms from dealing in local currency.
The naira is being protected from further declines after the FX rate pricing methodology caused a change in the currency curve, a move that some have labeled as desperate. Some Nigerians are determined to gamble against their country in order to extra ‘bucks’ due to economic cracks.
“It is a tough time to be a Nigerian living in Nigeria. Everything has changed including the air we breathe. The Central Bank has plunged the nation into a mess due to its shifted priority under the previous administration – the cleaning process has also been messy, pushing both inflation and exchange rates upward”.
In peer-to-peer trading, some currency traders via the crypto exchanges, Binance, and OctaFX have continued to bet against the local currency by demanding for US dollar. The US dollar is seeing large demand not for immediate use but storage by Nigerians and other unknown hands via these crypto exchanges, and fintech platforms like Chippers.
The Naira depreciated by 1.86%, closing at N1,571.31 per US dollar in the official market. The exchange rate also worsened by 0.39% in the parallel market, closing at N1,809 per dollar on Thursday. In the global commodity market, Oil prices steadied on Thursday as Brent crude futures were down by 0.6%, to $82.51 a barrel. Nigeria’s crude oil grade was priced higher.
Also, the West Texas Intermediate (WTI) crude futures skidded by 0.7%, to $77.37 a barrel on the news of a big rise in U.S. crude inventories which offset the supportive impact of another attack on shipping near Yemen on Thursday.
