Nigeria’s President Bola Tinubu brought his message of optimism to the New York Nasdaq exchange this week, calling on investors to “be confident in Nigeria.”

However, his spirited demeanor contrasts starkly with the growing unease on the streets of Nigeria, where confidence in the national currency, the naira, is eroding rapidly.

On Thursday, the naira hit a historic low, and currency traders tracking the exchange rate predict it is teetering on the edge of reaching a 1000-per-dollar exchange rate on the parallel market. The naira’s value has fallen nearly 30% below its official rate on the FMDQ OTC trading platform as both individuals and businesses scramble to acquire U.S. dollars.

Ogho Okiti, Chief Executive of ThinkBusiness Africa, a Lagos-based advisory and data services firm, described the current situation as a “demand for foreign exchange stampede,” noting that the demand extends beyond imports to the preservation of value.

The recent plunge in the naira has dampened much of the optimism generated by President Tinubu’s reform program, which he unveiled shortly after taking office in June.

His initial promises included unifying the complex exchange rate system and abolishing costly fuel subsidies, which initially sent Nigerian markets soaring.

During his speech in New York, President Tinubu reaffirmed his commitment to these reforms, assuring investors that bottlenecks had been removed and the exchange rate had been stabilized. However, market experts have a different perspective. Many attribute the naira’s decline to the central bank’s failure to supply dollars to the official market, leaving buyers no choice but to turn to street traders for foreign currency.

This divergence has dramatically widened the gap between the parallel and official exchange rates, which had initially converged after Tinubu’s inauguration.

Market players argue that authorities are not allowing the foreign exchange market to function as a “willing buyer, willing seller” platform, as they had promised.

Ayo Salami, Chief Investment Officer at Emerging Markets Investment Management Ltd. in London, stated, “With the current restrictions in the FX market, it is not possible to form a realistic judgment on the value of the naira.”

Concerns about reforms have grown further, especially after Tinubu was compelled to suspend a planned gasoline price increase last month. Hopes for a prompt and substantial interest rate hike to stabilize the naira were dashed by the central bank’s announcement that next week’s policy meeting would be postponed indefinitely.

Currently, interest rates stand at 18.75%, while inflation approaches 30%.

Moreover, the confirmation of the central bank’s new governor, former Citigroup executive Olayemi Cardoso, is pending. This delay, along with the resignation of the acting governor and four deputy governors, has created a policy-making vacuum at the highest level.

Foreign investors remain cautious about investing in local assets due to fears of exposure to a depreciating naira and concerns about capital withdrawal. The authorities have also yet to clear a backlog of hard currency arrears totaling billions of dollars owed to foreign companies and investors.

The naira’s decline has also affected Nigerian dollar bond markets, with issues maturing in 2033 falling more than half a cent on Thursday to 76.5 cents, a significant drop from end-July highs. While the Lagos stock exchange closed slightly lower for a second consecutive day, it still hovers near the 15-year highs reached soon after Tinubu’s inauguration.

Segun Agbaje, CEO of Guaranty Trust Holding Co., summed up the situation, saying, “People are not going to come in until they’re sure that there is a certain amount of stability around the exchange rate, and that’s where we are.”

Foreign investors and Nigerians alike will be closely watching how President Tinubu’s government navigates these economic challenges in the coming months.

The Nigerian naira’s exchange rate to the US dollar has remained a cause for concern as the exchange rate hovered around N1000/$1.

Earlier this week, Investors King reported that the exchange rate had weakened to N983/$1, but several social media sources indicate it reached as high as N1000/$1.

Meanwhile, on peer-to-peer (P2P) platforms, it is trading at N984 as of the latest update. Officially, the exchange rate closed at N770.7/$1 on the NIFEX window.

The Central Bank of Nigeria (CBN) had announced a plan to clear a $10 billion foreign exchange backlog within two weeks, with Acting Governor Folashodun Shonubi stating that commercial banks would play a significant role in the process.

However, liquidity issues in the market have raised doubts about the feasibility of this plan.

Operators in the forex market have reported disarray, with many licensed bureau de change operators struggling to access dollars for trading. This scarcity has led to the emergence of various exchange rates, including rates on platforms like Binance and Dubai, reflecting the market’s complexity.

Experts, speaking at a recent Nairametrics ClubHouse session, expressed skepticism about the CBN’s timeline to improve forex liquidity, emphasizing the need for a well-executed strategy rather than short-term promises.

Adding to the complexity, the exchange rate depreciation coincides with President Tinubu’s trip to New York, where he seeks foreign direct investment for Nigeria. US Deputy Secretary of Treasury Wally Adeyemo mentioned the importance of Nigeria’s macroeconomic framework to attract such investments.

As Nigeria grapples with forex scarcity, the government faces the challenge of restoring confidence in its economic stability to attract much-needed foreign investments.

Nigeria’s economic woes seem to be deepening as the Naira continues its steep decline, reaching N980 against the US Dollar on the black market.

This alarming depreciation has sent shockwaves through the nation, raising questions about the stability of the country’s financial system and the effects of Naira devaluation.

However, as the Nigerian Naira continued to decline against its global counterparts, cryptocurrency attraction surged across the country.

According to a recent report by Chainalysis, Naira devaluation in 2022 has driven cryptocurrency transaction volume to $56.7 billion year-on-year, defying the Central Bank of Nigeria’s ban on crypto-related activities in the banking sector.

While the ban, implemented in February 2021, was expected to limit cryptocurrency transactions in the country and compel Nigerians to make payments using the central bank’s channels, more Nigerians continue to jump on cryptocurrency. Making Nigeria the second-highest crypto adopter.

Commenting on the report, Chainalysis said, “These dynamics are reflected in the data. Interest in Bitcoin and stablecoins has generally risen as the Naira’s value has decreased, particularly during the most recent extremely steep drops in June and July of 2023.”

The firm attributes Nigeria’s growing crypto economy to citizens seeking to preserve the value of their savings amidst rising inflation and debt. It also points out that crypto adoption may be a solution to Nigeria’s economic challenges, which have been exacerbated by political instability, the COVID-19 pandemic, and plummeting oil prices.

As Nigeria grapples with its currency’s decline, the crypto market offers a glimmer of hope. Despite regulatory constraints, Nigerians are turning to cryptocurrencies to secure their financial future, creating a unique financial landscape where digital assets thrive in the face of traditional currency devaluation.