Naira falls to lowest ever as Emefiele's suspension confuses market

The foreign exchange market (FX), specifically the parallel market segment, was on Saturday thrown into confusion, following the suspension of Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) by President Bola Ahmed Tinubu.

Tinubu on Friday suspended Emefiele, following the ongoing investigation of his office and the planned reforms in the financial sector of the economy.

Traders at the parallel market, popularly called black market, said the market could not establish any rate after the suspension of the governor regulating the banking and finance sector of the economy.

“There is no rate today. People are not buying because they said the rate might go down as the CBN governor has been suspended. I was even begging one of my customers to buy at N750, he refused, “one trader told BusinessDay on Saturday.

At the close of business on Friday naira closed at the rate of N760 per dollar, stronger than N765 traded during the intraday trading of that same day.

At the Investors and Exporters (I&E) on Friday, Naira fell to N472.50, against the dollar, lowest ever recorded since the market was created in 2017.

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This represents 0.63 percent (N3) when compared to N469.50/$1 quoted on Thursday at the official foreign exchange market.

Most currency traders who participated at the foreign exchange auction on Friday maintained bids between N460/$1, lower and N477.00/$1, higher bid.

Tinubu had in his inaugural speech on May 29, 2023 signalled plans for a single exchange rate. He said monetary policy needs thorough house cleaning and that the Central Bank must work towards a unified exchange rate.

This will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy.

Brent crude oil price extended its prior week’s decline, down 0.3 percent week-on-week (w/w) to settle at $75.89/bbl. On the domestic front, Nigeria’s foreign reserves declined mildly by 60bps w/w to $34.9ban as of June 7, 2023, a report by Afrinvest Securities Limited noted.

“We expect the naira to trade relatively around the N470 band across the official market segment barring any market distortion and current market information driving demand. Also, as the CBN continues its weekly FX market intervention to defend the value of the naira at the retail FX auction and secondary windows, we anticipate movement in rates in tandem with market realities,” analysts at Cowry Asset Management Limited said.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.