On Monday, the Nigerian naira plummeted to an unprecedented low of N1,534 against the US dollar on the official Nigerian Autonomous Foreign Exchange Market.
This marks a significant decrease of 3.93 percent, representing a loss of N58 compared to the previous week’s closing rate of N1,476.13/$, as reported by FMDQ Exchange, the platform responsible for publishing official foreign exchange trading rates in the country.
This recent official rate stands as the lowest recorded since the Central Bank of Nigeria adopted a floating exchange rate regime in June 2023. Conversely, at the parallel market, the naira was traded within the range of N1,480 to N1,490 per dollar.
Notably, the local currency has shown a trend of trading higher in the parallel market, particularly following the revision of the methodology used by FMDQ to determine the official exchange rate.
The adjustment in the calculation methodology for the official exchange rate has contributed to the depreciation of the naira, which has transitioned from trading at over 900 naira per dollar to exceeding 1,400 naira per dollar.
In December, the naira experienced a significant downturn, breaching the N1,000 mark against the dollar on the official window.
The decline continued with the naira hitting an all-time low of N1,099.05/$ on December 8, followed by rates of N1,043.09/$ on December 28, 2023, and N1,035.12/$ on January 3, 2024. Subsequently, on January 9, 2024, the rate stood at N1,089.51/$, and on January 10, 2024, it reached N1,082.32/$. Further exacerbating the situation, the naira fell to an unprecedented low of N1,348.63/$ on January 30, 2024, coinciding with the FMDQ’s revision of the official exchange rate calculation methodology.
Meanwhile, there has been a significant decline in dollar sales by banks, with a staggering 56.58 percent drop to $253.77 million recorded on Friday from a peak of $584.53 million on the first trading day after the Central Bank of Nigeria’s directive for banks to sell excess dollars in the official foreign exchange market. Commercial banks cumulatively sold a total of $1.97 billion within a week.
Currency traders in Abuja, commonly known as Bureau De Change operators, quoted buying rates for the greenback ranging between N1,480 and N1,490, with selling prices ranging from N1,500 to N1,503, thereby maintaining a profit margin of N23.
Commenting on the situation, Mallam Yahu, a BDC operator in Wuse, stated, “We currently buy between the rate of N1,480 and N1,490, and we sell at N1,500 and N1,503.” However, another seller, identified as Yahaya Abdul, expressed limitations in purchasing beyond the rate of N1,460.
