Nigeria Naira Plummets to 1,030/$ as Speculators Fuel Exchange Rate Decline

The Nigerian Naira faced a steep fall on Monday, hitting an average of 1,030 Naira against the US Dollar in the parallel market. This marked a significant loss, with an 8.42% decline compared to the N950 exchange rate at the close of the previous week. This alarming devaluation follows a recent period of stability and is the first drop since the Central Bank of Nigeria began addressing its FX backlog.

Bureaux De Change operators reported that the Naira was trading between N990 to N1,030 per US Dollar. Traders quoted varying rates, with some selling at N995 and buying at N1,020, while others sold at N960 and bought at N990.

Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, explained that the Dollar's resurgence against the Naira is due to individuals who had previously purchased it at a higher rate resisting its devaluation following the Central Bank of Nigeria's recent actions.

Last week, the Central Bank initiated the payment of outstanding matured FX forwards to multiple banks, aimed at bolstering liquidity in the foreign exchange market. This move led to the Naira's brief appreciation, gaining approximately N220 against the US Dollar in the parallel market. However, the Naira's momentum seems to have reversed as it ended the day at N1,030 per US Dollar.

Gwadabe emphasized the importance of sustaining market confidence and liquidity to maintain favorable exchange rates. The parallel market primarily caters to retail customers, and further details about liquidity injections into this sector remain uncertain