October 25, (THEWILL) – The naira on Tuesday plunged to a record low of N1,310 per dollar on the parallel market, thereby activating life-threatening concerns over prevailing economic hardship that has made life unbearable for the citizens.
Spiraling inflation, now at 26.72 percent as of September 2023, has triggered huge losses for businesses and low consumer demands as the naira witnesses continued bashing since the forex market reform introduced by the government on June 14, 2023.
Worst hit is food inflation which rose to 30.64 percent during the period.
The worsening fate of the naira followed strong demand on the parallel market (also known as the black market) which is seen as the “true” value of the local currency as against the official forex window.
Tuesday’s closing rate of N1,310/$ represents a 6.07 percent (N75) drop, weaker than N1,235 recorded at the close of trading on Monday.
On the Nigerian Autonomous Foreign Exchange Market (NAFEM), formerly I&E window, the naira on Tuesday lost 6.86 percent after strengthening against the dollar by 1.85 percent on Monday to close at N847.77/$.
This is weaker than N793.34 on Monday and N808.27 quoted on Friday – the deepest point since the forex reform, data from the FMDQ, the aggregator platform, showed.
Transactions at willing buyers and willing sellers activities on Tuesday showed that traders offered and sold at a bid rate of N900/$ high and N700/$ low during the day before settling at the N847.77 equilibrium.
The daily FX market turnover increased by 8.03 percent to $88.10 million on Tuesday from $81.55 million recorded on Monday and $79.26 million on Friday at NAFEM.
The finance minister, Mr Wale Edun, said on Monday that Nigeria expects as much as $10 billion in new foreign currency inflows in the next few weeks to ease acute dollar shortages in the foreign exchange market.
Government also mulls outlawing parallel forex market in the coming weeks.
Foreign exchange reserves have risen by 0.18 percent in the last one week to $33.28 billion as of October 23, 2023 compared to $33.22 billion on October 13, 2023, data from the CBN website indicated.
The CBN is scheduled to conduct a Primary Market Auction on Wednesday, to roll over NT-bills maturities worth N108.13 billion across 91-day (N2.85 billion), 182-day (N7.95 billion), and 364-day (N97.33 billion) tenors.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
