Nigeria Naira Plunges to N1,105 Against Dollar

The Naira experienced a staggering fall, reaching a historic low of N1,105 against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the Central Bank of Nigeria's (CBN) approved official market.

The day began with the Naira opening at N830, marking a rapid depreciation of over N200 within hours.

However, the dramatic plunge was short-lived as the currency rebounded, closing at 841.14 by the end of the day. This swift recovery offers a momentary respite, but questions linger about the factors driving such volatility.

According to Reuters, the sharp depreciation brought the official exchange rate uncomfortably close to the parallel market rate.

At the parallel market, dollars reportedly opened at N1,135 and closed at a fluctuating range of N1,150 to N1,200. Bureau De Change (BDC) operators, like Alhaji Hassan Sabo in Lagos, reflected the uncertainty in the market.

He mentioned buying at N1,100 and selling at N1,150, emphasizing the scarcity of available dollars. Sabo expressed skepticism about an immediate drop in rates, highlighting the current unavailability of the dollar and suggesting a potential increase in the coming days.

Capital market analyst Samuel Showunmi weighed in, proposing a return to multiple exchange rates to encourage the flow of dollars into the market through BDCs.

He also pointed out concerns about currency racketeering within the banking sector.
As the nation grapples with this currency rollercoaster, attention turns to the government's strategies and the broader economic implications of such rapid fluctuations.

Source: Daily Trust