Naira plunges to 1,531/$1 on official market

The Nigerian naira plummeted to an unprecedented low against the US dollar on the official market, as reported by FMDQ Exchange on Wednesday.

The currency’s value dipped alarmingly during Tuesday’s trading session, reaching a low of 1,531 naira to the dollar, surpassing the rates observed in the unofficial parallel market, where it stood at 1,460 naira to the dollar.

The official market saw a slight recovery by the close of the day, with the naira settling at 1,482.57 to the dollar, as per the data provided by FMDQ.

This significant drop comes on the heels of a recent announcement by the market regulator, FMDQ OTC Securities Exchange.

Last Friday, the regulator revised its methodology for calculating the currency’s closing rates, opting to incorporate a broader range of data into its computations.

The revision in methodology and the subsequent change in computation levels have been cited as contributing factors to the naira’s latest decline. Market participants and observers are closely monitoring the situation, as the naira’s performance on the official market has raised concerns over potential economic implications.

The naira has lost around 40 percent since the start of the year. Its official exchange rate has been drifting towards the parallel market level as foreign currency shortages in the West African nation funnel demand to unofficial sources.

The central bank has warned lenders about underreporting transactions on the financial market, leading to misinformation, attempts to create price distortions and market manipulation, and said such activity would be sanctioned.

On Wednesday the currency eased on the forwards market, with traders quoting the dollar as low as 1,650 in a year’s time.