The official market of Nigeria witnessed a major drop in the value of its currency, the naira, on Monday. According to Refinitiv data, the naira plummeted to a record low of 465 per dollar. This has been attributed to the upcoming central bank foreign exchange auction, the results of which are eagerly awaited by traders.
The fall in the naira’s value has been a cause of concern for Nigeria’s economy, especially as it comes at a time when the country is already grappling with inflation, rising debt, and a drop in oil prices. In the last few months, the naira has seen a steady decline in value, and this latest development only exacerbates the problem.
One of the key factors behind the fall in the naira’s value is the country’s over-dependence on oil. Nigeria is one of the largest producers of crude oil in the world, and the bulk of its export revenue comes from oil. However, the recent drop in oil prices has hit Nigeria hard, as it has resulted in a drop in export revenue and a decline in foreign exchange reserves.
Moreover, Nigeria’s inflation rate has been steadily rising over the last few months, reaching a four-year high of 17.33% in February. This has been attributed to a combination of factors such as rising food prices, insecurity in some parts of the country, and the devaluation of the naira. The high inflation rate has had a negative impact on the country’s economy, leading to a decrease in purchasing power and a rise in the cost of living.
The Central Bank of Nigeria (CBN) has been trying to stabilize the naira by intervening in the foreign exchange market. In March, the CBN devalued the naira by 7.6% against the dollar, a move that was aimed at unifying the official and parallel exchange rates. However, this move did not have the desired effect, and the naira has continued to decline in value.
Traders are now waiting with bated breath for the outcome of Friday’s central bank foreign exchange auction, as this could have a major impact on the naira’s value. The auction is expected to provide an opportunity for market participants to buy dollars at a fixed exchange rate, which could help stabilize the naira.
In conclusion, the fall in the value of Nigeria’s naira to a record low of 465 per dollar is a cause for concern for the country’s economy. The naira has been on a steady decline in recent months, and the upcoming central bank foreign exchange auction is being closely watched by traders. It remains to be seen what impact the auction will have on the naira’s value, but one thing is clear – Nigeria’s economy is in dire need of stabilization.
The decline in Nigeria’s naira has been a cause for concern for some time now, and there are several factors behind it. One of the main reasons is the country’s over-dependence on oil. Nigeria is one of the largest producers of crude oil in the world, and the bulk of its export revenue comes from oil.