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Naira plummets to record low against US dollar in both markets

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The Nigerian Naira experienced a significant drop on Tuesday, hitting an all-time low against the US dollar in both official and parallel markets. The currency depreciated by 8.9% from Monday’s closing value, falling to N848.12/$1 from N778.80/$1 in the official market, according to data from FMDQ.

This sharp decline was triggered by a 212% surge in forex supply, which increased from $43.09 million to $134.8 million. The intraday rates fluctuated between a high of N700.00 and a low of N981.00 before settling down.

Simultaneously, the Naira traded at N1,050/$1 in the parallel market, up from the previous rate of N1,040/$1 due to a shortage in dollar circulation and increased demand. This even pushed the unofficial rate to N1,060/$1, resulting in a spread of N201.88 between the markets and a market margin of 24%.

Tuesday’s depreciation represents an 80% depreciation since June 13, 2023, prior to the radical forex reform of June 14 when the Naira traded at N472/$ and N768/$ at the official and parallel markets respectively.

Street currency dealers across Lagos sold it between N1,040 to N1,049/$ while the activity volume escalated to $234.28 million from $43.09 million recorded on Monday.

The Central Bank of Nigeria (CBN) had previously indicated its plan to operate a “managed float” regime and intervene when necessary. Tuesday’s depreciation is seen as part of this apex bank’s deliberate act allowing a free float of the Naira to bridge the gap between official and parallel markets.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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