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.

The Nigerian naira showed resilience in the official foreign exchange market, gaining against the US dollar while the black market witnessed an unexpected surge.

The official market witnessed a significant boost as the naira’s value appreciated by 2.96 percent, marking a positive development for the nation’s economy.

According to data obtained from FMDQ Exchange, the dollar’s price plummeted by N23.09, closing at N756.91/$1, compared to the N780/$1 rate reported just the day before. Investors and traders in the official window engaged in active trading, with the dollar reaching a high of N804.14/$1 and a low of N720/$1.

Surprisingly, despite the drop in the dollar’s value, authorized dealers and their clients recorded $45.88 million in foreign exchange transactions. However, this figure marked a noticeable decline of $23.86 million, representing a 34.21 percent decrease from the previous trading session of $69.74 million.

Meanwhile, the black market depicted a contrasting picture, with the dollar’s rate surging to an astonishing N960/$1, as reported by AbokiFX.

This sudden rise of N5 from the previous day’s N955/$1 left many in the financial market astounded.

In parallel developments, the naira also gained against the British pound, closing at N1220/£1, a N10 increase from the previous day’s N1210/£1.

Similarly, the European currency, the euro, saw an appreciation of N10, reaching N1015/€1, compared to Thursday’s N1005/€1 rate.

The simultaneous trends in the official and black markets underscore the volatility of the foreign exchange market in Nigeria and the challenges faced by policymakers in maintaining stability.

As traders and investors closely monitor these developments, the central bank’s interventions and market dynamics will continue to shape the exchange rate landscape in the days to come.

The Nigerian naira experienced a further depreciation against the US dollar on Wednesday at the parallel market as it closed at N950 to a US Dollar.

This downturn follows Tuesday’s closing rate of 930/$, causing unease among Bureau de Change (BDC) operators and the broader financial community.

BDC operators, who are at the forefront of currency exchange transactions, expressed their concerns over the naira’s recent erratic behavior. On Wednesday, the naira was being bought and sold at rates between 935/$ and 950/$, reflecting the currency’s increasing volatility.

Yusuf Kareem, a BDC operator, lamented the scarcity of the naira and the unexplained fluctuations in its value, saying, “We commenced trading at 930/$ in the morning and it closed at 950/$ in the evening. The naira has been scarce; we don’t know what is happening.”

Sanusi Ibrahim, another BDC operator, echoed these sentiments, saying, “The naira was bought and sold at 935/$ and 950/$ today. We don’t know what will happen tomorrow.”

Amid this financial turbulence, the Association of Bureaux De Change Operators of Nigeria (ABCON) has made a compelling call to the Central Bank of Nigeria (CBN). They are urging the CBN to grant Bureaux De Change operators digital autonomy to facilitate exchange rate convergence and stabilize the market.

In a statement issued by the President of ABCON, Dr. Aminu Gwadabe, he underscores the importance of this digital transformation, stating that it could “promote rate convergence, curb volatility in the market, and promote economic growth.”

Dr. Gwadabe further pointed out that ABCON had previously played a crucial role in achieving rate convergence in various periods from 2006 to 2020.

Granting digital autonomy to BDC operators, according to Dr. Gwadabe, would lead to the discovery of a true market rate, enhance the implementation of the Federal Government’s harmonized foreign exchange rate policies, and enable effective monitoring of BDCs’ transactions to meet statutory and regulatory requirements.

The recent depreciation of the naira and the calls for digital transformation have raised questions about the stability of Nigeria’s currency and the steps needed to ensure its resilience in the face of economic challenges. As the nation watches anxiously, the future of the naira and the actions of the Central Bank remain topics of intense scrutiny and debate.