On December 19, 2023, Nigeria’s naira hit a record low against the US dollar on the official market.
The currency fell to 1,248 naira to the dollar during mid-day trading, according to LSEG data. However, it later recovered to 845 naira.
Chronic dollar shortages on the official market and comments by the Central Bank of Nigeria Governor, Olayemi Cardoso, have caused the naira’s official exchange rate to drift towards the parallel market level.
The parallel market exchange rate for the naira was around 1,225 to the dollar on the same day.
The Central Bank of Nigeria has stated that it will allow market forces to determine exchange rates while setting clear, transparent, and harmonised market operations rules. The one-month non-deliverable forwards market quoted the naira at 1,002.50 to the dollar on the same day.
The naira’s depreciation on the official market has led to concerns about inflation and the country’s economic stability. The Central Bank of Nigeria has been stabilising the currency, including increasing foreign exchange reserves and implementing policies to support local production.
However, the naira’s depreciation on the official market suggests that more needs to be done to address the underlying issues causing the currency’s weakness.
Related
