The meltdown of Nigeria’s official currency, Naira, continues as crumbled at the parallel market segment of the currency market at midday of Thursday, February 15, 2024, to N1,600/$1.
The meltdown has made nonsense of the efforts of the Central Bank of Nigeria (CBN) to bring stability into the foreign exchange (FX) market to strengthen the Naira.
Compared with Wednesday’s exchange rate of N1,564/$1, it showed that the domestic currency weakened against the benchmark U.S. currency by N36 in less than 24 hours.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, which is the official market, the Nigerian currency depreciated against its United States counterpart by N4.31 or 0.3 per cent on Wednesday to trade at N1,503.38/$1, It was N1,499.07/$1 on Wednesday.
The domestic currency has not known peace in the forex market segments since the CBN bowed to the demands from International Monetary Fund (IMF) and the World Bank and unified the exchange rate in June 2023.
The FX volatility in Nigeria has continued to deplete the value of the Naira, forcing several businesses to reorganise their models or in some cases pack up like in the case of Unilever Nigeria, GSK, and others.
Also, the Naira instability in the currency market has triggered a significant rise in the prices of goods and services in Nigeria, with inflation refusing to come down from the rooftop.
For example, on Thursday, the National Bureau of Statistics (NBS) said inflation for January 2024 rose to 29.90 per cent versus 28.92 per cent in December 2023. The lingering food crisis was largely responsible for the increase.
This newspaper gathered that forex traders on the streets are having a difficult time at the moment because of Dollar scarcity, causing the Naira to further weaken.
The CBN, as part of efforts to calm the situation, reportedly sold about $90 million to banks a few days ago, the first time it was doing this in more than four months.
It had recently cleared part of the FX backlogs to foreign airlines, business organisations and others in a bid to stabilise the currency market.