Friday, 22 November, 2024

As devaluation bets spiral, value of Naira falls to record low


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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.

Nigeriaā€™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 canā€™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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