Nigerian naira hits record black market low against USD

AFRICAN BUSINESS AND ECONOMYOctober 19, 2023 at 12:46 AM UTC

Nigeria's naira hit a record low of N1,100 per dollar on the black market on Wednesday, online platform abokiFX showed, a day after the currency hit a new low on the official market due to persistent dollar shortages.

The naira has been in freefall on the unofficial market, where it trades freely, which worsened after currency restrictions were lifted on the official market. The unit fell to a record low of 980 naira to the dollar on the official market on Tuesday.

The central bank has said it will intervene in the foreign exchange market occasionally to boost liquidity, after last week ending an eight-year ban on some items that were restricted from accessing dollars on the official market. Last month, the currency slid past N1,000 per dollar on the black market and continued to weaken as excess dollar demand was funneled into the informal market from the official market.

Key Takeaways

Nigeria, the largest economy in Africa, has been contending with persistent dollar shortages in its official market, resulting in declining trading volumes. Consequently, the Nigerian naira has reached a historically low exchange rate against the US dollar, with a noticeable premium observed in street trading compared to the official rate. In June, trading restrictions on the currency were lifted, but the central bank's recent measures, including occasional interventions and the removal of restrictions on 43 items, are considered steps aimed at harmonizing exchange rates and alleviating pressure on the naira in the parallel market, where importers of these previously restricted items can now access dollars more readily.

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