The Nigerian naira plummeted to an unprecedented low of N1,534 against the US dollar on the official Nigerian Autonomous Foreign Exchange Market on Monday.
This marks a significant decline of 3.93 percent or N58 from the previous closing rate of N1,476.13/$ recorded last Friday, as reported by FMDQ Exchange, the platform responsible for publishing official foreign exchange trading data in Nigeria.
Monday’s official exchange rate represents the weakest performance of the national currency since the Central Bank of Nigeria adopted a floating exchange rate system in June 2023.
However, in the parallel market on Monday, the naira traded within the range of N1,480 to N1,490. Recent trends indicate that the local currency has been consistently trading higher on the parallel market, particularly since FMDQ revised its methodology for calculating the official exchange rate.
The adjustment in the calculation method for the official exchange rate contributed to the naira’s depreciation from over 900/dollar to over 1,400/dollar.
In December, the naira breached the N1000/$ mark on the official window, hitting an all-time low of N1,099.05/$ on December 8, N1043.09/$ on December 28, 2023, and N1035.12/$ on January 3, 2024. Subsequently, it reached N1089.51/$ on January 9, 2024, and N1082.32/$ on January 10, 2024. The naira then plummeted to a record low of N1348.63/$ on January 30, 2024, following the FMDQ’s review of its methodology for calculating the official exchange rate.
Meanwhile, dollar sales by banks witnessed a significant decline of 56.58 percent, totaling $253.77 million on Friday from a peak of $584.53 million on the first trading day after the CBN’s directive for banks to offload excess dollars in the official FX market.
Commercial banks collectively sold $1.97 billion within the week, while currency traders in Abuja, also known as Bureau De Change operators, quoted buying rates for the greenback ranging from N1,480 to N1,490 and selling rates between N1,500 and N1,503, resulting in a profit margin of N23.
Mallam Yahu, a BDC operator in Wuse, disclosed that they currently purchase dollars within the range of N1,480 to N1,490 and sell at rates of N1,500 to N1,503. However, another seller, Yahaya Abdul, expressed reluctance to purchase beyond the rate of N1,460.