Nigeria’s local currency crashes to record low
The Nigerian naira plunged to a record low on the parallel market as shrinking dollar supply from the central bank forced buyers to the street for hard currency.
The naira was changing hands at 983 per dollar on Wednesday, from 962 the previous day and 903 naira at the start of this month.
That’s more than 20% weaker than the official rate of 776.60 naira per dollar as reported by FMDQ, a Lagos-based platform.
The new Bola Tinubu administration aimed to stabilize the exchange rate, supported by the central bank's intervention. In August, the acting CBN Governor warned speculators of potential losses while state oil firm NNPC revealed a $3.5 billion borrowing deal to address rising FX demand. These efforts boosted the local currency, with predictions they could reduce the black market premium over the official window to 5% but recent data from JP Morgan showed Nigeria's central bank had net reserves of around $3.7 billion as of December 2022, stoking concerns about lower-than-expected external reserves. The cause of the naira's depreciation remains unclear, causing uncertainty among traders and analysts.