The Nigerian naira experienced a further decline at the official window, reaching an unprecedented low of N1,482 against the United States dollar on Tuesday. This follows the previous day’s closing rate of N1,348 after the FMDQ Securities Exchange revised its methodology for calculating exchange rates.
Simultaneously, the Central Bank of Nigeria (CBN) issued a circular to authorized dealers regarding financial market price transparency, cautioning against deceptive practices. The CBN expressed concern over inaccurate and misleading information reported by some dealers and their customers, emphasizing that such behavior violates ethical standards and amounts to market manipulation.
The circular warned that deliberate attempts to create price distortions through false transaction details would not be tolerated, and those engaging in such practices would face sanctions.
Concerns have been raised by economists and members of the organized private sector about the potential consequences of the naira’s fall at the NAFEX (Nigerian Autonomous Foreign Exchange) window. The decline is expected to lead to business closures, job losses, increased prices of goods and services, and higher inflation.
On Monday, FMDQ Securities Exchange adjusted its methodology to address recent fluctuations and challenges in the Nigerian foreign exchange market. This move was seen by some experts as a technical devaluation of the national currency.
The revised measures aim to enhance the accuracy and reliability of the NAFEX and NAFEM (Nigerian Autonomous Foreign Exchange Market) rates determination process, focusing on data availability and integrity through a rigorous validation process.
Despite these efforts by both FMDQ and the CBN to close the gap between official and parallel market rates, the naira continued to depreciate. The CBN governor, Olayemi Cardoso, acknowledged that the national currency was undervalued and emphasized the bank’s commitment to stabilizing the exchange rate through transparent market practices.
As the naira’s challenges persist, its impact on businesses and individuals remains a significant concern, and stakeholders are closely monitoring developments in the foreign exchange market.
