The Nigerian naira experienced a significant drop to a historic low of N1,400 per US dollar at the parallel market on Thursday. Despite recent interventions by the Central Bank of Nigeria (CBN) to stabilize the national currency, the persistent scarcity of dollars has continued to impact the exchange rate negatively.
Bureau de Change Operators confirmed the new low, expressing concerns over ongoing dollar scarcity in the country. BDC operators in Abuja disclosed that the exchange rate for one dollar reached N1,400, and there is uncertainty regarding future pricing due to high demand.
In addition to the challenges faced at the parallel market, the official Investor and Exporter window witnessed a 2.12% depreciation of the naira, closing at N900.96/$ compared to the previous day’s N882.24/$. The day’s transactions ranged from N789/$ to a high of N1,399/$, with a total FX turnover of $115.19 million, marking a 103.52% increase from the previous day.
The cryptocurrency peer-to-peer market also mirrored the naira’s decline, reaching a high of N1,400/$. On Binance’s P2P platform, the naira was trading at N1,395.8/$ at the time of reporting.
Despite the Central Bank’s efforts, which included paying $2 billion towards FX backlogs and obtaining a $2.25 billion oil-for-cash loan facility from the African Export-Import Bank through the Nigerian National Petroleum Company Limited, the naira’s challenges persist.
CBN Governor Olayemi Cardoso recently expressed optimism that the foreign exchange market would stabilize in 2024. He attributed this expectation to the reduction in petroleum product imports and the implementation of a market-determined exchange rate policy by the CBN. Cardoso also noted that the naira is currently undervalued.
However, the volatility in the exchange rate, according to the International Monetary Fund’s Dr. Christian Ebeke, is linked to excess naira in circulation and structural factors related to the newness of the market. Johnson Chukwu, the Group Managing Director of Cowry Asset Management Limited, projected that the naira might depreciate to N1,500/$ in 2024.
