Naira Hits Record Low on Official Market

CBN Reiterates Determination To Phase-out Old Naira Notes

The Nigerian naira experienced a significant downturn on the official Nigerian Autonomous Foreign Exchange Market, plummeting to an all-time low of N1,534 against the US dollar on Monday.

This marks a notable decline of 3.93%, representing a decrease of N58 from the previous closing rate of N1,476.13/$ observed last Friday, as reported by FMDQ Exchange, a platform responsible for publishing official foreign exchange trading data in the country.

Monday’s official exchange rate represents the weakest level recorded since the Central Bank of Nigeria implemented the floatation of the national currency back in June 2023.

However, in the parallel market, the naira traded within the range of N1,480 to N1,490 against the dollar on Monday. It appears that the local currency has been experiencing relatively higher trading rates in the parallel market, especially following the adjustment in the methodology used by FMDQ to calculate the official exchange rate.

The revision in the calculation methodology for the official exchange rate has led to the devaluation of the naira, transitioning from over 900/dollar to over 1,400/dollar.

In December, the naira witnessed several instances of record lows on the official window. On December 8, the naira plummeted to an unprecedented low of N1,099.05/$. Subsequently, on December 28, 2023, it closed at N1,043.09/$, followed by N1,035.12/$ on January 3, 2024. By January 9, 2024, it had depreciated to N1,089.51/$ and further to N1,082.32/$ on January 10, 2024. The currency reached another historic low of N1,348.63/$ on January 30, 2024, coinciding with the revision of FMDQ’s methodology for calculating the official exchange rate.

Meanwhile, the volume of dollar sales by banks experienced a significant decline of 56.58%, falling to $253.77 million on Friday from a peak of $584.53 million recorded on Monday, the first trading day after the Central Bank of Nigeria instructed banks to offload excess dollars in the official FX market. In total, commercial banks sold a cumulative $1.97 billion over the week.

In Abuja, currency traders, commonly known as Bureau De Change operators, quoted the buying rate of the US dollar between N1,480 and N1,490, with a selling price ranging from N1,500 to N1,503, resulting in a profit margin of N23.

Mallam Yahu, a BDC operator in Wuse, revealed, “We currently buy the dollar at rates between N1,480 and N1,490, while selling at N1,500 and N1,503.”

Another seller, Yahaya Abdul, expressed limitations in purchasing beyond the rate of N1,460.

Leave a Reply