The Naira witnessed a sharp decline at the official exchange window on Tuesday, reaching an unprecedented low of N1,482 against the United States dollar. This significant drop follows Monday’s closure at N1,348 against the greenback, subsequent to a review by the FMDQ Securities Exchange on their rate calculation methodology.
The Central Bank of Nigeria (CBN) issued a circular to authorized dealers emphasizing financial market price transparency and warning against malpractices. The bank condemned the dissemination of inaccurate information in the financial market, labeling such actions as market manipulation, which would now face stringent sanctions.
Concerns over the naira’s depreciation were voiced by members of the organized private sector and economists, citing potential repercussions such as business closures, job losses, commodity price hikes, and heightened inflation.
The naira’s further plunge to N1,482.57/$ at the close of trading on Tuesday stirred discussions about a technical devaluation of the national currency, attributed to the revision of exchange rate calculation methods by FMDQ Securities Exchange. The adjustment aimed to address market fluctuations and enhance rate accuracy, aligning NAFEX and NAFEM rates with prevailing market conditions.
These measures, alongside efforts by the CBN, aimed to narrow the gap between official and parallel exchange rates. While the official rate experienced a 9.93% decline, remaining stable at N1,450/$ on the parallel market, cryptocurrency peer-to-peer trading platforms observed the naira trading at N1,439.5/$ on Binance’s P2P platform.
Despite assertions by the CBN governor, Olayemi Cardoso, that the naira is undervalued and efforts are underway to stabilize it, the currency’s continued depreciation underscores the ongoing challenges faced by the apex bank and the Federal Government. Establishing transparency and fostering a fair market environment remain paramount in their quest to stabilize exchange rates and ensure economic stability for all stakeholders.