There seems to be no end in sight for the Nigerian Naira decline going into 2023 as aggressive sell-off of soon-to-be abandoned local currency continues across the unregulated black market.
The Naira was exchanged at N820 to the United States Dollar at the black market on Thursday despite the official exchange rate remaining at N439.88/US$1.
About two months ago, Dollar illiquidity plunged the Nigerian Naira to over N700 for the first time in the history of the country, Investors King analysis has shown. This, the Central Bank of Nigeria (CBN) and the Nigerian National Petroleum Corporation Limited (NNPCL) attributed to oil theft and the ongoing crisis in the Niger Delta region of the country that made it impossible to meet its OPEC quota of 1.8 million barrels per day.
Nigeria generates over 90% of its foreign revenue from crude oil sales and uses the dollar proceeds to service its over 200 million import-dependent population.
However, despite crude oil trading at a consistently high price after Russia invaded Ukraine, Nigeria has been unable to profit from crude oil like Saudi Arabia, Angola and other known oil nations.
In a desperate effort to put an end to oil theft and up Nigeria’s crude oil production from about 900,000 barrels per day, Nigeria engaged the service of Tompolo, a militant leader once declared wanted by the government, to provide the needed security for the nation’s oil pipelines.
While the result of that engagement is yet to crystalise, CBN announced it was embarking on a Naira redesign journey to curb hoarding ahead of the 2023 general election, reduce counterfeit and further its cashless policy agenda.
The decision prompted hoarders to start converting about N2.7 trillion estimated by the CBN to be outside the banking system to the U.S. Dollar.
This led to an aggressive mopping of available dollars at a time when students studying abroad are looking to pay tuition fees for the new session and importers who could not access forex at the official forex section going all out to lay their hands on Dollars for Christmas sales.
