Naira at the official rate on Monday depreciated by 3.94 percent to N1,598.54 against the dollar, hitting an all-time low amid the numerous policies of the Central Bank of Nigeria’s (CBN) to enhance liquidity and stabilise the foreign exchange market.
The local currency, at the Nigerian Autonomous Foreign Exchange Market (NAFEM), depreciated by 0.99 per cent to N1627.61 against the Euro.
At the parallel market, it also dropped by 2.46 per cent on Monday to close at N1659.77 against the dollar.
Naira at the parallel market has reached a 38.49 Year-on-Year (YoY) low, following scarcity.
Further findings revealed that the naira at the parallel market exchange rate experienced a significant decline, plummeting to a record low of N2040 per Great Britain Pound (GBP), driven by persistent demand pressures that continue to erode the currency’s value.
This marks a notable decrease of 5.39 per cent or N110 compared to the N1,930 rate recorded the previous day.
This depreciation stands as an unprecedented occurrence, representing the lowest point in the historical performance of the Naira.
Concurrently, black-market exchange rates have continued to witness the devaluation of the Nigerian Naira, exacerbated by a substantial surge in inflation, as reported by the National Bureau of Statistics (NBS) for January 2024.
The inflation rate surged to 29.90 per cent, indicating a significant rise from the 28.92 per cent recorded in the previous month.
These developments persist despite the Central Bank of Nigeria’s (CBN) implementation of several policies aimed at bolstering the supply of foreign exchange (forex).
One of the recent policies was the CBN’s announcement of halting international oil companies (IOCs) operating in Nigeria from immediately remitting 100 per cent of their forex proceeds to their parent companies abroad.
Additionally, the Naira weakened against the Euro by 4.09 per cent, closing at N1720 against the Euro compared to N1650 reported the previous day.
Market analysts attribute the recent decline to a consistent surge in demand for dollars that has been evident since the commencement of January. The primary contributors to this heightened demand include:
A substantial portion of the demand is attributed to businesses actively seeking to restock goods or acquire raw materials, necessitating a higher demand for foreign exchange.
Individuals pursuing overseas studies have also played a significant role in driving the demand for dollars. This trend is likely connected to the need for tuition payments and related educational expenses.
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