Naira sinks to long-feared black market rate of 1,000 to dollar

The naira fell to a new record low of 1,000 to a dollar on the parallel market on Tuesday, traders said, driven by speculation and continuing shortage of foreign currency on the official market.

The currency slipped from 990 to 1,000, according to traders who spoke to Pluboard Tuesday in Abuja. “We expected this to happen soon,” said Akwu Yakubu, a trader in Abuja.

AbokiFX, which publishes online black market exchange rates, also quoted 1,000 naira to a dollar. The currency moved closer to that mark last week when it traded at 980. It closed on the official window on Monday at ₦773.25.

Long feared

The naira 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.

The official and black market rates briefly converged following the reform, but they’ve diverged steadily since then as dollar supply from the central bank fell short.

The currency 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 1000th is a record low analysts have long predicted and is seen as having a psychological importance.

More worries for Nigerians

The naira’s depreciation on the black market has put pressure on businesses and consumers, making it more expensive to import goods and services. It is also fuelling inflation, which is already at a 18-year high.

President Tinubu named Olayemi Cardoso as governor of the Central Bank of Nigeria last week. The Senate is scheduled to consider Cardoso’s confirmation later on Tuesday.

Cardoso is expected to face a number of challenges, including boosting dollar liquidity to help stabilize the currency.

The central bank has not intervened by selling dollars on the official market for three weeks, according to Bloomberg, and that is believed to have helped accelerate the currency’s slide on the parallel market.