Naira Hits N950/$1: Nigeria Grapples with Escalating Exchange Rate Woes

In a concerning development, the exchange rate for the Nigerian Naira in the Lagos Parallel Market has surged, with buyers now acquiring a dollar for N950 and selling it for N955, compared to the N945.1 rate just a day earlier, as reported by sources at Bureau De Change (BDC).

Furthermore, the United States Dollar’s closing rate reached N780/$1 on Thursday, marking a 2.88% depreciation in the Investors’ and Exporters’ window of the official market.

Authorized dealers in the official foreign exchange window, under the auspices of the Central Bank of Nigeria (CBN), have adjusted their asking price to N21.88 kobo higher than the previous day’s rate of N758.12/$1.

September has witnessed substantial losses in the black-market exchange rate, with fluctuations remaining within 1% throughout the month. In the peer-to-peer market, the dollar traded at N951, down from N927/$1 reported just a day prior.

The Naira’s depreciation extended to other major currencies, with a 1.66% drop against the British Pound, going from N1190/£1 to N1210/£1. Similarly, the Euro exchange rate slipped by 2.51% from N995/€1 to N1020/€1.

This widespread decline follows the Central Bank of Nigeria’s (CBN) warning to International Money Transfer Operators (IMTOs) to adhere to its plus or minus 2.5% price limits.

Despite assurances to address the issue, the central bank’s supply constraints remain unresolved, leaving speculators largely unaffected.

Three months after introducing the unified Exchange Rate window, Nigeria grapples with an ongoing currency crisis that has prompted many citizens to consider adopting the US dollar.

While speculators have experienced temporary losses, the exchange rate continues to weaken due to the central bank’s inability to demonstrate effective actions to improve supply.

When the Tinubu administration endorsed the unification of the exchange rate on June 14th, introducing a managed float exchange rate system, it received praise from experts and stakeholders as a significant step toward stabilizing the Naira.

However, three months down the line, the exchange rate has depreciated by a staggering 20.5% since the implementation of the new system.

Furthermore, the country’s external reserves have dwindled, declining from $34.6 billion at the introduction of the managed float system to $33.2 billion as of September 12, 2023.

Despite the challenges, the Tinubu administration defends its policy, asserting its importance in preserving the country’s foreign reserves and attracting foreign investment.

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