In a concerning development, Nigeria’s naira hit a fresh all-time low, plummeting to N1,105 against the U.S. dollar on the official market. This marked a sharp decline from its previous close at N830 per dollar, as reported by LSEG data.
The exact cause of the naira’s decline in the official market remains unclear, adding an air of uncertainty to the economic landscape.
Notably, the currency of Africa’s largest economy has consistently reached record lows on the parallel market, driven by excess demand redirected from the official market.
Traders attribute the recent naira fluctuations to government-announced policies, introducing an element of uncertainty for speculators. The Federal Government is actively planning to digitize foreign exchange transactions to discourage speculative demands and hoarding of foreign exchange in cash.
Nigeria has grappled with chronic dollar shortages since a period of low oil prices prompted foreign investors to exit local assets. The subsequent struggle to attract investors back, coupled with challenges in meeting the demand for dollars from various sectors, has placed additional strain on the economy.
As a result, the CBN has begun implementing a series of measures, including a crackdown on illegal currency trading in an effort to close the gap with the unofficial exchange rate. These efforts aim to narrow the gap with the unofficial exchange rate of the naira.
**This is a developing story