Nigeria's Naira Hits New All-Time Low on Official Market

Nigeria's naira fell to a new record low of 1,105 to the U.S. dollar on the official market on Thursday , down from 830 naira to the dollar at its close on Wednesday, LSEG data showed.

It was not immediately clear what had driven the naira's fall on the official market.

The currency of Africa's biggest economy has also been hitting successive record lows on the parallel market, where it trades freely, as excess demand on the official market gets funnelled there.

Traders attribute the recent naira fluctuations to government-announced policies, introducing an element of uncertainty for speculators. The Federal Government is actively planning to digitize foreign exchange transactions to discourage speculative demands and hoarding of foreign exchange in cash.

Nigeria has grappled with chronic dollar shortages since a period of low oil prices prompted foreign investors to exit local assets. The subsequent struggle to attract investors back, coupled with challenges in meeting the demand for dollars from various sectors, has placed additional strain on the economy.

As a result, the CBN has begun implementing a series of measures, including a crackdown on illegal currency trading in an effort to close the gap with the unofficial exchange rate. These efforts aim to narrow the gap with the unofficial exchange rate of the naira.

November 16, 2023