Naira hits record low against dollar amid market volatility

By Sodiq Adelakun

In a surprising turn of events, the Nigerian naira plummeted to an all-time low against the US dollar on the official market this Tuesday, mirroring rates typically seen on the unofficial parallel market.

Amidst scant trading, the naira experienced a dramatic dip, touching 1,248 to the dollar during mid-day trading, according to the latest LSEG figures.

The day began with the naira at 927 to the dollar but saw a partial recovery, closing at 845 naira.

This volatility comes amidst statements from Central Bank of Nigeria Governor Olayemi Cardoso, who has expressed a commitment to allowing market forces to freely determine exchange rates.

He emphasised the need for clear, transparent, and unified rules to regulate market operations. Persistent dollar scarcities have been a significant factor in the official market rate’s convergence with the parallel market rate, which saw the naira trading around 1,225.

Meanwhile, the currency was listed at N1,002.50 on the one-month non-deliverable forwards market.

Governor Cardoso’s approach and the ongoing dollar shortages have led to increased speculation and a closer alignment of the official exchange rate with the parallel market.

This shift indicated a potential change in the dynamics of Nigeria’s foreign exchange market, with implications for the economy and future monetary policy.