Nigeria’s currency fell to a record low of N1,416 per dollar at the parallel market following strong demand amid shortage as traders hoard the available dollars.
This indicated a 15.19 per cent depreciation year-on-year when compared to N1,200 at the beginning of the month.
“Some people are hoarding the dollars waiting for when the demand will be high. Again, the market is uncertain of the next action by the government, a trader who gave his name as Aliu said.
At the official foreign exchange (FX) market, naira weakened by 0.41 percent as the dollar was quoted at N882.24 on Wednesday as against N878.61 closed on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ showed.
During the intraday trading on Wednesday, currency dealers quoted one dollar at N1,313, (high) on the spot and N700 lower rate. However, the rates were stronger than N1,336.05 and N701 per dollar respectively quoted on Tuesday.
The daily foreign exchange market turnover declined marginally by 3.18 percent to $56.60 million on Wednesday from $58.46 million recorded on Tuesday.
Governor of the Central Bank of Nigeria, Olayemi Cardoso, had on Wednesday declared that the naira is currently undervalued. Speaking at the launch of the NESG 2024 Macroeconomic Outlook report, he outlined the bank’s commitment to stabilising the currency through genuine price discovery.
Cardoso emphasised a coordinated approach with fiscal measures to expedite the process, stating, “We believe that the naira is currently undervalued, and coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate.”
Highlighting collaborative efforts, he pointed to initiatives ensuring that all foreign exchange (FX) inflows pass through the Central Bank.
This coordinated effort, he said, would greatly enhance the bank’s FX flows and contribute to the accretion of reserves.
Cardoso attributed the expected stability in the foreign exchange market for 2024 to the reduction in petroleum products imports and the recent implementation of a market-determined exchange rate policy.
He said, “This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing arbitrage opportunities. The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors.”