The Nigerian currency, the naira, experienced its most significant decline in recent times against the US dollar at the official market, as reported by DailyTrust.
The official market, specifically the Nigerian Autonomous Foreign Exchange Market (NAFEM), witnessed the naira tumbling to an alarming N1,105 against the US dollar on Thursday, marking a distressing development for the Central Bank of Nigeria (CBN).
Just on Wednesday before this drastic fall, the naira had demonstrated resilience, gaining ground against the US dollar despite the country grappling with a soaring inflation rate. FMDQ data indicated that the naira strengthened to N818/$1 on Wednesday, a notable improvement from the N850.22/$1 recorded on Tuesday. This represented a significant gain of N31.23 in a single day.
However, the positive momentum was short-lived as the currency depreciated by over N200 within hours after opening at N830. Fortunately, the naira rebounded, closing at 841.14 by the end of the day.
According to Reuters, the sharp depreciation of the currency yesterday brought “The official exchange rate within touching distance of the parallel market rate.”
At the parallel market, Daily Trust reports that dollars opened at N1,135 and closed at N1,150 to N1,200.
One of the Bureau De Change (BDC) operators at a popular market in Lagos, Alhaji Hassan Sabo said, “Today we are buying at N1,100 and selling at N1,150.”
Asked on the prospect of the rate dropping, he said, “It cannot come down like that because the dollar is not available, some are not even selling at the rates I just gave you. It might even go up tomorrow.”
A capital market analyst, Samuel Showunmi said the government should return to multiple exchange rates to push the dollars into the market through the BDC.
“What we are seeing now with the banks is currency racketeering within the banking sector as well,” he said.