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Independence Day: How Naira Fell Against Dollar From 65 Kobo in 1973 to N737 in 2022

In 1987, you will need N4 to buy $1. In 1989, it was N7.39 kobo to $1. By the time General Ibrahim Babangida left power in 1993, the naira had dramatically stumbled against the dollar, exchanging at N17 to $1. 

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Naira to Dollar Exchange- Investors King Rate - Investors King

On this day, 62 years ago, Nigeria got her independence from the defunct British Empire. The country did not however adopt a new currency until 1973. On the 1st of January 1973, the British pound was officially changed to the Naira as Nigerian currency at an exchange rate of £1 to N2. 

Nigerian naira was very strong at the time that it was ranked ahead of the U.S Dollar. To buy one dollar in 1973, you needed just 65 kobo. Between 1973 to 1985, the Naira was so strong that you never needed up to a naira to buy a dollar. 

In fact, in 1980, all you needed to buy a dollar was just 55 kobo. 

However, in 1986, as a twist of fate, Nigeria found itself in a perilous situation. The economy started declining after the military regime of General Ibrahim Babangida requested a bailout from multilateral financial institutions. 

The International Monetary  (IMF) was Babangida’s point of call. However, like a devil, IMF would not give him something without taking something in return. IMF gave him a Second Tier Foreign Exchange Market (SFEM) as part of the reform that Nigeria must undertake. 

As a military desperado who was looking for a bailout and international acceptance, Babangida obliged to the conditions. 

SFEM, thereafter, served as Nigeria’s second official foreign exchange market which was opened to both Nigerians and foreigners. 

Before SFEM, it was the sole duty of the Central Bank of Nigeria (CBN) to fix the exchange rate. The CBN at the time was meticulous in its job by restricting importation and implementing closely monitored foreign exchange control. These had helped the naira to trade fairly strongly against the dollar in the 1970s and early 1980s. 

It was popularly believed that IMF was not comfortable with the CBN’s oversight over the foreign exchange. 

By and large, by the end of 1986, the dollar had risen against the naira by more than 100%. In 1987, you will need N4 to buy $1. In 1989, it was N7.39 kobo to $1. By the time General Ibrahim Babangida left power in 1993, the naira had dramatically stumbled against the dollar, exchanging at N17 to $1. 

The Naira decline did not stop with the exit of General Ibrahim Babangida. By the time he left the Aso Rock, Nigeria’s economy was already in shambles. His exit which people hoped will bring some relief only brought more hardship as General Sanni Abacha overthrew the interim government of Chief Earnest Shonekan.

Abacha’s regime was characterised by widespread embezzlement of public funds in dollars. There was corruption in almost all facets of the economy. From government offices to banking institutions. Little wonder the country still receives some of his oversea stash funds to date. 

General Sanni Abacha closely monitored the CBN and ensured the dollar was majorly made available to himself and his friends. The CBN introduced the Autonomous Foreign Exchange Market in 1985 to closely monitor the movement of dollars. The thirst for importation drastically reduced which made the official rate of naira to dollar stand around N22 to $1 for five years which Abacha used in power before his death.

However, the commercial banks picked a flaw to exploit AFEM. Since the CBN’s AFEM requires all commercial banks to request dollars from the CBN, bankers came up with what was known as ‘blended’ rate. 

For instance, if an importer requests $2 million from its bank, the bank will inflate the figure to $5 million knowing full well that CBN will likely not approve the full request. If CBN approves $3 million, the bank thereafter will pay their client and take the remaining $1 million to the black market where they can make more profit from dollar arbitrage. 

At this time, the black market otherwise known as the parallel market was booming and striving hard. Many banks made fortunes from this dollar arbitrage. 

In 1999, when Nigeria returned to democracy, the Olusegun Obasanjo regime met naira to dollar exchange at N22 but by the time he left in 2007, you will need N125 to buy $1. The fall of naira has since then continued till date. 

At the close of the market on Friday 30th of September 2022, $1 was sold for N432 at the Importers and Exporters Window (I&E) while $1 was sold for N737 on the black market. 

It would be recalled that the present administration met dollar to naira exchange at the rate of N197 to $1. 

Investors King had earlier reported that naira has lost more than 100% of its value since the beginning of this administration. Little wonder it was ranked 11th worst performing currency in the world and 3rd worst performing currency in Africa. 

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Naira

Naira Falls to N1,676.90/$1 at Official Market, Slides to N1,708.87/$1 at Alternative Window

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New Naira notes

The Naira depreciated at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by 0.61 percent and sold against the US Dollar at N1,676.90/$1 on Monday, November 4.

At the official market, the domestic currency recorded a N10.18 drop versus N1,666.72/$1,  valued at the previous session on Friday.

Equally at the black market, the Naira lost N4.76 against the greenback to close at N1,708.87 to the US Dollar compared to N1,704.11/$1 it closed on Friday.

The outcomes came as the weak supply gripping the marker cross paths with high seasonal demand placing pressure on the local currency.

This occurred as supply dropped further at the session as turnover published on the FMDQ Group website stood at $79.47 million indicating that the session’s turnover fell by 15.7 per cent, indicating that there was a decrease of $14.75 million compared to $94.22 million published the previous day.

With the year coming to a close, there has been a higher demand for FX but with the Central Bank of Nigeria (CBN) limiting interventions, constraints have seen a volatile outcome for the local currency.

Equally, the domestic currency also witnessed losses against the British currency and the Euro in the week’s opening session.

On the Pound Sterling, the local currency made a loss of N3.38 to wrap the session at N2,160.63/£1 from N2,157.25/£1 that it sold at the previous session and against the Euro, the Nigerian currency closed at N1,816.40/€1 versus N1,814.79/€1, indicating an N1.61 depreciation.

The local currency also declined in its value against the British currency in the black market as it dropped by N9.63 to sell at N2,217.39/£1 compared with the preceding session’s N2,207.76/£1 and followed the same pattern against the Euro as it depreciated N10.73 to quote at N1,862.98/€1 versus the previous day’s rate of N1,852.25/€1.

The Naira, however, had a different trend against the Canadian Dollar as it appreciated by N1.66 to close at N1,222.33 per Canadian Dollar, compared to Friday’s N1,223.99 per CAD.

CBN’s limited capacity to sufficiently intervene across the market segments and suboptimal inflows from Foreign Portfolio Investors will continue to impact the trajectory of the local currency in coming weeks, analysts said.

Measures that don’t translate to more injection of FX into the pressured market will only provide temporary reprieve, they added.

Meanwhile, the CBN will soon begin to test run its automated FX platform to increase market confidence and reduce speculative trading.

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Naira

Naira Appreciates to N1,666 Per Dollar at FX Market, N1,704.11 at Parallel Market

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Naira Exchange Rates - Investors King

The Naira appreciated by 0.5 percent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday following an N8.77 rise to close at N1,666.72/$1 compared with Thursday’s closing rate of N1,675.49/$1 despite worsening supply in the market.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover fell by $72.41 million or 43.5 per cent to $94.20 million from $166.61 million.

However, the local currency slid on the Pound Sterling and the Euro in the final session. For the British currency, the local currency depreciated by N10.10 and closed at N2,157.25/£1 from N2,147.15/£1 while it closed at the rate of N1,814.79/€1, a slump of N23.43 against N1,791.36/€1 against the Euro.

Meanwhile, the Naira rose further by N7.66 against the American in the parallel market segment to close at N1,704.11 to the US Dollar compared to N1,711.77/$1 it closed on Thursday.

Also, the domestic currency extended its gain against the British currency during the final session as the Naira made a further appreciation of N16 to trade at N2,207.76/£1 from N2,223.76/£1 that it sold at the previous session and against the Euro, it appreciated N14.82 to close at N1,852.25/€1 versus the previous day’s rate of N1,867.07/€1.

The local currency gained a marginal N1.62 to close at N1,233.99 per Canadian Dollar, compared to Thursday’s N1,235.61 per CAD.

The Central Bank of Nigeria (CBN) at the recently concluded World Bank/IMF meetings held in Washington, DC last week said the foreign exchange market will not depend on the apex bank’s intervention for supply and stability.

This is evidenced by the stop of sales of Dollars to the market as it plans to improve supply organically without its intervention from time to time while maintaining balance in the market.

“While you might see us intervene from time to time, we are trying to ensure the market is not dependent on the intervention of the central bank.

“I think that we are looking at conditions that market return as much as possible to improve supply organically without the Central Bank having to put in money all the time,” the CBN deputy governor on economic policy, Mr Mohammed Abdullahi, disclosed.

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Naira

Naira Loses 2.7% on Dollar at NAFEX, Gains N6 to N1,711/$1 at Parallel Market

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New Naira Notes

The Naira fell by 2.7 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,675.49/$1 on Thursday, October 311 as the local currency depreciated despite a slight increase in supply.

In the official market, the domestic currency lost N44.32 on the American currency in the official market versus N1,631.17/$1, which it closed in the previous session on Wednesday.

In a turn of fortune, the Naira rose N6.66 against the greenback in the parallel market segment to close at N1,711.77 to the US Dollar compared to N1,718.43/$1 it closed on Wednesday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $166.61 million indicating that the session’s turnover jumped by 29.2 per cent, indicating a rise of $37.63 million compared to $128.98 million that was published in the last trading session.

Equally, the Naira weakened its value against the Pound Sterling in the official market by N3.75 to sell at N2,147.15/£1 compared with the preceding session’s N2,143.40/£1.

It followed the same path against the Euro, depreciating N9.29 to quote at N1,791.36/€1 versus midweek’s closing rate of N1,782.07/€1.

In a different outcome in the black market, the domestic currency headed up against the British currency during the Thursday session as the Naira made an appreciation of N10.86 to wrap the session at N2,223.76/£1 from N2,234.62/£1 that it sold at the previous session.

However, the Naira followed a different pattern against the Euro as it depreciated N12.51 to close at N1,867.07/€1 versus the previous day’s rate of N1,854.56/€1.

The local currency gained a marginal 9 Kobo to close at N1,235.61 per Canadian Dollar, compared to Wednesday’s N1,235.70 per CAD.

Investors King reports that the Nigerian macro environment is placing pressure on the FX market with latest data showing that there is a high money supply in the system complemented by a wider government budget deficit.

The Central Bank of Nigeria (CBN) revealed that Nigeria’s money supply often known as M3 grew 62.8 percent in the last one year to N109 trillion from N66.9 trillion in September 2023.

 

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