Emmanuel OchayiThe Nigerian naira plummeted to an unprecedented low of N1,348.63 against the dollar on the Nigerian Autonomous Foreign Exchange Market on Monday, marking a 51.21% fall from the previous week’s official rate.
The nation’s official exchange rate hasn’t witnessed such a dire situation since the Central Bank of Nigeria adopted a floating exchange rate in June 2023.
Efforts by the Central Bank of Nigeria and the Federal Government to bolster liquidity in the foreign exchange market seem futile, as the naira has consistently depreciated, breaching the N1000/$ mark on the official window. Even the parallel market saw a decline, with Bureau de Change Operators reporting a further fall to N1,450/$, emphasizing the gravity of the situation.
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Currency traders like Abdusallam Abubakar and Magaji Mohammed confirmed the dismal state of affairs, with the former stating, “If you want to buy, I’ll sell to you at N1,450/$. That’s the price for today.” The cryptocurrency peer-to-peer market mirrored this trend, with the naira trading at N1,429/$ on Binance’s P2P platform.
The official response from the Central Bank of Nigeria reveals ongoing efforts to address the crisis, including recent payments totaling $2.5 billion to clear forex backlogs.
Despite these measures, the exchange rate gap between the official and parallel markets has narrowed to N101.37.
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CBN’s spokesperson, Mrs. Hakama Sidi Ali, assured the public of the bank’s commitment to resolving legitimate foreign exchange backlogs promptly. CBN Governor Olayemi Cardoso acknowledged the undervaluation of the naira, underscoring the need for comprehensive strategies to stabilize the Nigerian foreign exchange markets.
The ramifications of the naira’s freefall extend beyond financial markets, potentially affecting the prices of goods and services.
Manufacturers are contemplating price hikes in response to the volatile exchange rates, highlighting the broader economic impact of this currency crisis.
