Naira Hits Record Low At ₦1,534/$ In Official Forex Market

The Nigerian currency, the Naira, plummeted to an unprecedented low against the US dollar, reaching ₦1,534/$ in the official Nigerian Autonomous Foreign Exchange Market on Monday, marking a significant decline in its value.

This recent depreciation represents a 3.93 percent or N58 drop from the ₦1,476.13/$ rate at which it closed the previous week, according to data from FMDQ Exchange, the official platform for foreign exchange trading in Nigeria.

This latest drop in the Naira’s value marks the lowest official exchange rate since the Central Bank of Nigeria (CBN) decided to float the national currency in June 2023, a move that has since led to volatile fluctuations in its value against the dollar.

Interestingly, the Naira fared slightly better in the parallel market, trading between ₦1,480 and ₦1,490 on Monday.

This disparity between the official and parallel market rates has become more pronounced following FMDQ’s revision of its methodology for calculating the official exchange rate, which has been a contributing factor to the Naira’s depreciation from over 900/dollar to over 1,400/dollar.

The Naira’s struggle against the dollar has been ongoing, with the currency breaching the ₦1,000/$ mark on the official window in December.

Notably, on December 8, it fell to an all-time low of ₦1,099.05/$, and the situation has continued to deteriorate, with the Naira reaching ₦1,348.63/$ on January 30, 2024, following another revision of the FMDQ’s exchange rate calculation methodology.

In addition to the Naira’s depreciation, there has been a significant drop in dollar sales by banks, which decreased by 56.58 percent to $253.77 million on Friday from a peak of $584.53 million on Monday, the first trading day after the CBN’s directive to banks to offload excess dollars in the official FX market.

Over the course of one week, commercial banks sold a total of $1.97 billion.

The continuous slide of the Naira highlights the persistent challenges facing Nigeria’s foreign exchange market, amid efforts by the Central Bank and financial institutions to stabilize the currency and manage the supply and demand dynamics of foreign exchange in the country.