After the central bank auctioned dollars at a naira rate that was about 30% weaker than on the strictly regulated official market, Nigeria’s currency, the naira, plunged to a record low.
The central bank of Africa’s largest economy sold dollars at 645 naira each in response to strong demand from businesses and importers, fueling rumours that a devaluation may be imminent following the election of a new president last month.
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The naira fell as high as 0.7% in official trading on the Nigerian Exchange, the biggest in over six months, before losses were pared to a record-low 467.04 naira per dollar at 2:40 p.m. local time, on Wednesday, June 7.
Nigeria’s dollar earnings and reserves are dwindling and the government uses multiple exchange rates to manage supply and demand for foreign currency. Most residents who can’t get hold of the greenback on the main market or at auctions are forced to turn to black market trading where the naira is about 40% weaker.
President Bola Tinubu had announced plan to adopt a uniform exchange rate during his inauguration last month, part of a program to boost investments and grow the economy. Last week, the central bank denied a report that there was a steep decline in the official naira rate.
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