Nigeria’s naira dropped to an all-time low against the dollar in the official market on Friday, according to data from FMDQ Exchange on Monday.
The currency plummeted to as low as ₦1,421 per dollar during trading on Friday, surpassing the rate quoted in the parallel market, around ₦1,400.
The naira later closed at ₦891.90 on the official market.
This steep decline followed Central Bank Governor Olayemi Cardoso’s announcement last Wednesday that the bank was working to improve liquidity in the foreign exchange market.
Kyle Chapman, FX markets analyst at London-based Ballinger & Co., noted that the naira has now surpassed its previous record low on the parallel market, which could hinder the influx of capital needed to stabilise the exchange rate.
“The downward spiral is becoming self-perpetuating. The further it falls, the less investors want to enter Nigeria, deepening the risk premium embedded into the naira rate,” Chapman explained.
The official exchange rate of the naira has been drifting towards the parallel market level due to the central bank’s delay in clearing outstanding amounts in forward deals, exacerbating a foreign-currency shortage in Nigeria.
This development follows a recent suspension by Toyota subsidiary Daihatsu for failing to properly conduct vehicle safety tests for decades.
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