Nigerian Naira Depreciates to 1,250 per US Dollar in Parallel Market

The Nigerian naira has plummeted against the US dollar, raising concerns about the economy's stability. The Central Bank of Nigeria aims to stabilize the currency, but the sharp depreciation has wide-ranging impacts.

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Nigerian Naira Depreciates to 1,250 per US Dollar in Parallel Market

Nigerian Naira Depreciates to 1,250 per US Dollar in Parallel Market

The Nigerian naira has depreciated significantly against the US dollar in the dollar, black, market, reaching a rate of 1,250 naira per US dollar as of April 23, 2024. This sharp decline comes after a period where the naira was briefly considered the best-performing currency globally.

The naira closed at 1,223 per US dollar in the unofficial market on Monday, ending its winning streak against the US dollar. At the official Nigeria Autonomous Foreign Exchange Market (NAFEM) window, the naira depreciated by 5.51% or 64.5 naira to close at 1,234.49 per dollar, compared to 1,169.99 per dollar on April 19.

The Central Bank of Nigeria (CBN) Governor Yemi Cardoso attributed the depreciation to foreign loan repayment and a depletion of Nigeria's foreign reserves, which dropped to $32.29 billion as of April 15. Cardoso stated that the CBN's intent is not to defend the naira at any cost.

Why this matters: The significant depreciation of the naira has raised concerns among Nigerians about the sudden downturn in the currency's value. The fluctuations in the exchange rate can have wide-ranging impacts on the Nigerian economy, affecting imports, inflation, and the overall financial stability of the country.

Despite the recent depreciation, the CBN has reassured the public of its efforts to stabilize the foreign exchange rate. CBN Governor Cardoso stated, "The local currency will continue to appreciate against foreign currencies despite the recent fluctuations." The CBN has implemented various measures, including selling US dollars to Bureau De Changes at 1,101 naira per dollar and cash pooling for international oil companies, to help strengthen the naira in both the official, unofficial, markets.

Key Takeaways

  • Nigerian naira depreciated to 1,250 per USD in black market as of April 23, 2024.
  • Naira closed at 1,223 per USD in unofficial market, 1,234.49 per USD in official market.
  • Depreciation attributed to foreign loan repayment, depletion of foreign reserves to $32.29B.
  • Depreciation raises concerns about impacts on imports, inflation, financial stability in Nigeria.
  • CBN aims to stabilize forex rate, selling USD to BDCs at 1,101 naira, pooling oil company cash.