The Nigerian Naira hit an unprecedented low on Tuesday amid rising demand for the greenback across key forex segments.
The local currency was exchanged at N1,310 to a US dollar due to surging demand in the black market, representing a 6.07% depreciation from the previous day’s rate of N1,235.
This significant devaluation was in stark contrast to Monday when the Naira gained 1.85% in the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Finance Minister Wale Edun had announced hopes of an influx of up to $10 billion in foreign currency in the coming weeks to alleviate the acute dollar scarcity.
However, these expectations failed to prevent the currency’s downward spiral. At NAFEM, the dollar exchanged at N847.77, further weakening from N793.34 on Monday and N808.27 on Friday.
The parallel market witnessed buyers willing to pay as high as N900 per dollar and sellers offering it as low as N700 per dollar. The official market reported an 8.03% increase in daily FX market turnover, reaching $88.10 million.
Analysts believe that Nigeria’s currency may stabilize in the short term if the anticipated $10 billion inflow materializes.
Meanwhile, foreign exchange reserves have seen a slight uptick, reaching $33.28 billion as of October 23, 2023.
The situation has raised concerns about the economy’s stability, prompting the Central Bank to schedule a Primary Market Auction to roll over NT-bills worth N108.13 billion.
In other markets, Nigeria treasury bills and Open Market Operation (OMO) bills witnessed mixed reactions, with some marginal fluctuations in yields.