Nigeria’s official market witnessed a significant downturn on Tuesday as the country’s currency, the naira, plummeted to a record low against the dollar.
Thin trading conditions exacerbated the situation, leading to sharp fluctuations akin to levels observed in the unofficial parallel market, where the currency trades with greater flexibility.
LSEG data revealed that the naira tumbled to as low as N1,248 against the dollar during mid-day trading. This followed its opening rate of N927 earlier in the day.
Subsequently, the currency displayed some resilience, recovering to N845 later in the trading session.
Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), recently stated his intention to allow market forces to play a determining role in setting exchange rates.
He stressed the need for transparent and well-defined regulations governing market operations.
These remarks, coupled with persisting dollar shortages in the official market, contributed to the gradual convergence of the naira’s official exchange rate towards levels observed in the parallel market.
As of Tuesday, the currency was quoted at approximately N1,225 on the parallel market. In contrast, the one-month non-deliverable forwards market quoted it at N1,002.50, reflecting the intricate dynamics and varied valuations across different trading platforms, Reuters reported.
