Nigeria’s national currency, the naira, plunged to an unprecedented low of 1,300 against the US dollar on the black market, according to data from online platform abokiFX. This decline can be attributed to reduced trading activity on the parallel market and a scarcity of dollars on the official market.
The naira’s value has been in a steady decline on the unofficial market, where it is freely traded, following the lifting of currency restrictions on the official market. In the previous month, it breached the 1,000 naira per dollar mark on the black market and has continued to weaken.
Central bank governor Yemi Cardoso acknowledged on Monday that the naira would undergo an adjustment once clear regulations for market participants are established. Finance Minister Wale Edun also shared that Nigeria is anticipating $10 billion in foreign currency inflows in the coming weeks to enhance the foreign exchange market’s liquidity. While the specifics were not detailed, Edun mentioned that these inflows would result from dollar-denominated instruments, oil sales, and foreign investments.
On the official market, the naira has managed to regain some ground, reaching 775 to the dollar after reaching a historic low of 999 last week. The possibility of foreign exchange inflows has contributed to the slowing depreciation of the naira on the official market, as noted by one trader. Nevertheless, on the black market, the naira’s depreciation persisted due to limited trading activity.