The Naira hits a historic low in the official market

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The Nigerian naira hit a historic low of N1,534 against the US dollar on the official Nigerian Autonomous Foreign Exchange Market on Monday, marking a 3.93% decrease or N58 from the previous week’s close of N1,476.13/$.

FMDQ Exchange, responsible for publishing official foreign exchange trading, reported this unsettling decline.

This new official rate stands as the weakest since the Central Bank of Nigeria adopted a floating exchange rate for the national currency in June 2023.

Simultaneously, at the parallel market, the naira traded between N1,480 and N1,490, suggesting a recent trend of higher values compared to the official rates, especially following FMDQ’s revised methodology for calculating the official exchange rate.

The shift in methodology contributed to the naira’s depreciation from over 900/dollar to over 1,400/dollar. In December, the official rate surpassed N1,000/$, reaching an all-time low of N1,099.05/$ on December 8, 2023.

Subsequent dates saw fluctuations, with the naira closing at N1,035.12/$ on January 3, 2024, and hitting a low of N1,348.63/$ on January 30, 2024, coinciding with FMDQ’s methodology review.

Dollar sales by banks decreased significantly, dropping by 56.58% to $253.77 million on Friday from the peak of $584.53 million on the first trading day after the CBN’s directive for banks to sell excess dollars in the official FX market.

Commercial banks collectively sold $1.97 billion in one week.

In Abuja, Bureau De Change operators quoted the buying rate of the dollar at N1,480 and the selling price at N1,503, yielding a profit margin of N23.

Despite this, some BDC operators, like Yahaya Abdul, noted limitations in purchasing beyond N1,460.

 

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