The Nigerian naira experienced a significant decline, hitting an unprecedented low of N1348.63/$ on the Nigerian Autonomous Foreign Exchange Market this Monday.
This marks a substantial 51.21% decrease from the N891.90/$ recorded last Friday on the official market, as reported by FMDQ Securities Exchange data.
This official rate stands as the lowest exchange rate since the Central Bank of Nigeria adopted a floating approach for the national currency in June 2023.
Notably, the naira surpassed the N1000/$ mark on the official window, reaching an all-time low of N1,099.05/$ on December 8, 2023, and further depreciating to N1082.32/$ on January 10, 2024.
Despite efforts by the Central Bank of Nigeria and the Federal Government to enhance liquidity in the foreign exchange market, the naira’s steep depreciation persists.
The parallel market also reflects this trend, with Bureau de Change Operators reporting a decline to N1,450/$ at the close of Monday’s trading, compared to N1,420/$ last Friday.
Cryptocurrency peer-to-peer trading on Binance’s P2P platform saw the naira trading at N1,429/$.
The exchange rate gap between the official and parallel markets has narrowed to N101.37.
This depreciation continues despite recent efforts, including a $2.5bn payment by the Central Bank to clear forex backlogs.
A recent $500m payment and rumors of the bank owing $7bn in FX backlogs indicate ongoing challenges.
The CBN spokesperson, Mrs. Hakama Sidi Ali, confirmed the $500m payment on Monday, emphasizing the commitment to settling legitimate forex backlogs promptly.
The CBN’s comprehensive strategy aims to improve cash flow in the short, medium, and long term, addressing fundamental issues hindering the effective operation of the Nigerian FX markets.
Governor Olayemi Cardoso acknowledged that the naira is undervalued, and the continued decline is expected to impact the prices of goods and services negatively.
Manufacturers foresee potential price hikes in response to the fluctuating exchange rates.
