On the official market, the naira has plummeted to a new low of N422/$1.
The Nigerian currency, the naira, has fallen 2.6 percent to N422 per dollar, an all-time low at the Nigerian autonomous foreign exchange (NAFEX) rate — the default FX reference for official and legitimate transactions.
The NAFEX rate is the current rate in the investor and exporters (I&E) window, which was adopted as the country’s official forex market by the Central Bank of Nigeria (CBN) in May 2021.
The sharp drop came just days after Vice-President Yemi Osinbajo urged the Central Bank of Nigeria (CBN) to allow the naira to reflect market realities.
The exchange rate, according to Osinbajo, is artificially low, discouraging investors from bringing foreign exchange into the country.
“Professor Osinbajo is not advocating a depreciation of the naira. In a statement, Vice-spokesperson, President’s Laolu Akande, said, “He has always argued against a willy-nilly devaluation of the Naira.”
“For context, the Vice-point President’s was that the current Naira exchange rate benefits only those who can get a dollar for N410, and some of them simply turn around and sell to the parallel market for N570.
“This is why the Vice-President advocated for measures to boost foreign exchange supply rather than simply managing demand, which creates irresistible opportunities for arbitrage and corruption.”
“It is a well-known fact that foreign investors and exporters have been complaining that they have been unable to bring foreign exchange into the country at N410 and have had to purchase foreign exchange in the parallel market at N570 to meet their various needs due to foreign exchange shortages.”
The local currency, which opened trading at an indicative price of N413.50 to the dollar on Thursday, had dropped to N422 by the end of the day.
The naira traded as high as N436 per dollar on the spot during intra-day trading, while selling for as low as N404/$1. At the window, it was quoted as high as N446 and as low as N419.88 to the dollar on the futures side (futures contracts).
“The CBN sets the rate — it should be flexible, but it isn’t,” a banker told TheCable.
“When the stock market moves, it usually moves a lot.” At some point, I believe he switched from N380 to N411.”
The currency remained stable at N570 per dollar on the parallel market.
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