The official exchange rate of the Nigerian currency versus the U.S. dollar recently plunged to a record low of 1,248 naira for every greenback. The governor of the Central Bank of Nigeria has told the country’s legislators that he sees the foreign exchange market stabilizing in 2024.
Official Rate Nearly Matches the Parallel Market Rate
On Dec. 19, the Nigerian currency, the naira, briefly plunged to a record low of 1,248 naira for every U.S. dollar before recovering to close the day at 845 naira for every greenback. According to a Reuters report, the currency’s fall nearly matched the naira-to-dollar rates traders offer on the unofficial foreign exchange market.
When Nigerian President Bola Ahmed Tinubu assumed office in late May, the Central Bank of Nigeria (CBN) immediately abandoned the fixed exchange rate regime. As reported by Bitcoin.com News at the time, the naira-to-dollar exchange rate initially plunged by 30% from N470:US$1 to N634:$US1. Afterwards, the CBN allowed the naira to freely float, which saw it depreciate further.
On the unofficial market, the local currency has however continued to lose ground versus the greenback, and by December 20, one dollar bought 1,228 naira. Many experts believe Nigeria’s inability to generate enough foreign exchange to support its currency is one of the reasons why the naira continues to depreciate.
However, during his appearance before the Nigerian Senate and House of Representatives Joint Committee, CBN Governor Olayemi Cardoso predicted better fortunes for the naira in 2024.
“The outlook for the domestic economy remains positive and is expected to maintain a positive trajectory for 2024. Inflation pressures may persist in the short term but are expected to decline in 2024. Exchange rate pressures are also expected to reduce significantly with the smooth functioning of the foreign exchange market,” Cardoso said.
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