Naira fell to a record low on the black market on Wednesday, edging closer to 1000 to a dollar, as Nigeria’s foreign exchange problems fails to improve.
The currency traded at 980 to the U.S. dollar compared to 965 on Tuesday, according to AbokiFx, a website which publishes black market exchange rates for the currency,
The official market closed Wednesday at ₦770.7.
“The current free fall of the naira is mostly driven from speculation as the black market premium has reached 23.3%,” Reuters quoted a trader as saying.
“The pressure also shows that liquidity in the official market is unable to support about $400 million petroleum importers need monthly to import refined fuels, given their 70% control of the market,” he said.
Big fall
The currency has fallen more than 60% across both markets since the new government of President Bola Tinubu in June removed controls and allowed the naira to trade more freely.
He naira firmed up briefly in August after the Central Bank of Nigeria said it would intervene, and yet again fell despite an announcement by the state-oil company NNPC that it had secured a $3.5 billion loan to support the currency.
The naira has struggled for years against a stronger dollar, needed by many for everything from importation to payment of fees abroad to profit repatriation by companies.
While Nigeria has faced dollar shortage for years, demand for forex has also grown as many Nigerians seek ways of hedging against a weak currency and high inflation, preferring to keep their savings in dollars and cryptocurrencies.
A new report said Tuesday by New York-based blockchain research firm Chainalysis said the volume of crypto transactions in Nigeria grew 9% to $56.7 billion between July 2022 and June 2023, in part driven by the naira’s weakness.
The central bank under new governor Olayemi Cardoso, appointed last week, is yet to make a policy announcement seeking to boost dollar liquidity and stabilize the naira.
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