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Naira hits a record low of ₦1348.63 against the dollar

The naira’s sharp fall comes amid the CBN governor, Olayemi Cardoso’s announcement of the bank’s plans to improve liquidity in the foreign exchange market.

The naira on Monday, experienced its lowest fall as it exchanged for ₦1348.63/$ on the Nigerian Autonomous Foreign Exchange Market.

According to data from the FMDQ Securities Exchange, the drop signifies a 51.21% fall from the ₦891.90/$ the currency closed last Friday at the official market.

Analysts have said Monday’s official rate is the worst official exchange rate the naira has recorded since the Central Bank of Nigeria, CBN unified the country’s currency in June 2023.

The naira’s sharp fall comes amid the CBN governor, Olayemi Cardoso’s announcement of the bank’s plans to improve liquidity in the foreign exchange market.

Recall the FG had recently injected funds worth $500 million to clear part of its forex obligations. This payment comes amid a recent $2 billion payment for the same purpose.

According to the apex bank’s spokesperson, Hakama Sidi Ali, the $500 million payment was made in Abuja on Monday.

She said, “The Management of the CBN is committed to settling all legitimate foreign exchange backlogs within a short time frame.”

While commenting on the development, an FX markets analyst at London-based Ballinger & Co., Kyle Chapman, noted that the naira’s declining status has moved it further below its previous record low on the parallel market. Chapman added that this development would block the influx of capital needed to stabilise the exchange rate.

The downward spiral is becoming self-perpetuating. The further it falls, the less investors want to enter Nigeria, deepening the risk premium embedded into the naira rate,” Chapman explained.

The naira began its descent and closed above the ₦1000/$ mark on the official window by trading at ₦1,099.05/$ on December 8, 2023. It closed at ₦1043.09/$ on December 28, 2023; by January 3, 2024, it stood at ₦1035.12/$.

On January 9, 2024, it closed at ₦1089.51/$ and ₦1082.32/$ on January 10, 2024.

The naira’s fall has also been reported at the parallel market as it exchanged for ₦1,450/$ at the Bureau de Change at the end of trading on Monday.

The new exchange rate has narrowed the gap between the official and parallel markets to ₦101.37.

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