Naira hits N1960/ 1 in parallel market

By Sodiq Adelakun

The Nigerian Naira has experienced a significant decline in the parallel market exchange rate, reaching a record low of N1960 per Euro. This drop is due to persistent demand pressures that continue to erode the value of the currency.

Compared to the previous day’s rate of N1,855, this marks a notable decrease of 5.36 percent or N105.This depreciation is unprecedented and represents the lowest point in the historical performance of the Naira against the Euro.

The black-market exchange rates have also witnessed devaluation, further exacerbated by a substantial surge in inflation. According to the National Bureau of Statistics (NBS), the inflation rate surged to 29.90 percent  in January 2024, a significant rise from the previous month’s rate of 28.92 percent.

Despite the Central Bank of Nigeria’s (CBN) implementation of various policies to boost the supply of foreign exchange, these developments persist. The Naira has also depreciated against the dollar in the parallel forex market, with the exchange rate quoted at N1,880/$1, reflecting a 2.66 percent decrease from the previous day’s rate of N1,830.

In addition, the Great British Pound (GBP) has also seen a decline, standing at £1/N2260 compared to the previous day’s rate of £1/N2,210. This marks a notable decrease of 2.21 percent. It is worth recalling the recent tumultuous events on the cryptocurrency platform, Binance.

The exchange rate between the Naira and the popular stablecoin, Tether (USDT), plummeted to approximately N1900/USDT before subsequently rising to N1354.3. However, as of 7 am on Thursday, February 22, the Naira was trading between N1680-N1710/$1 USDT.

This situation arises amid several reports of a crackdown on cryptocurrency trading, which some authorities view as a significant contributing factor to the rapid depreciation of the naira.

Tether (USDT) is a stablecoin used as a medium of exchange for cryptocurrency traders looking to trade their local currency against the dollar. One USDT is equivalent to $1.

This dramatic drop and subsequent recovery underscore the volatile nature of cryptocurrency markets, especially in the context of Nigeria’s current economic climate.

The exact cause of the wild volatility experienced in the last 24 hours remains unclear, even as some attribute it to a broader crackdown on cryptocurrency trading by certain authorities, who argue that such activities have been contributing to the rapid devaluation of the naira.