Naira plummets to record low of N920 against US Dollar amidst surging demand
By Sodiq Adelakun
Naira has hit a new low against the US dollar, reaching N920 at the parallel segment of the foreign exchange market.
The decline is a result of strong demand for the greenback, with dealers buying from willing sellers at N915 and selling at N920 to willing buyers.
During intraday trading on Tuesday, the dollar was quoted at N920, marking a 0.54 percent depreciation compared to the morning session’s rate of N915 per dollar.
However, the latest drop in the value of the Naira against the US dollar is occurring despite the Central Bank of Nigeria’s announcement of an operational mechanism for Bureau De Change (BDC) operations.
The continuous decline of the Naira against the dollar has raised concerns among market participants and the general public.
It reflects the ongoing challenges faced by the Nigerian economy, including low oil prices, reduced foreign exchange reserves, and a decline in foreign direct investment.
The demand for the US dollar remains high due to several factors.
Importers require dollars to pay for goods and services from foreign countries and investors are seeking to convert their Naira holdings into dollars to protect their investments from the currency’s depreciation.
The Central Bank of Nigeria has been implementing various measures to stabilise the Naira and reduce the pressure on the foreign exchange market.
These measures include the introduction of the operational mechanism for BDC operations, which aims to enhance transparency and efficiency in the foreign exchange market.
However, these efforts have not been able to completely address the underlying issues affecting the Naira’s value.
The Central Bank’s interventions in the foreign exchange market have been limited by the decline in oil revenues, which has reduced the country’s foreign exchange reserves.
The depreciation of the Naira has significant implications for the Nigerian economy.
In the short term, the central bank may need to consider further measures to stabilise the Naira.
This could include tightening capital controls, increasing interest rates, or seeking external assistance to boost foreign exchange reserves.
The continued decline of the Naira against the US dollar highlights the urgent need for economic reforms in Nigeria.
Without decisive action, the country’s economy will continue to face challenges, and the Naira’s value will remain under pressure.
