• Tuesday, July 16, 2024
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Naira falls to record low in biggest drop this year

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Nigeria’s currency fell to a fresh record low, extending its losses since President Bola Tinubu’s call for changes in exchange rate policy.

According to Bloomberg the naira weakened 1% to 471.9 to the dollar as of 5:33 p.m. in the official, the biggest drop since December.

Many investors and economists now expect the multiple exchange rates of the Naira to converge over time at around N650 to the dollar but it is unclear if that convergence has begun.

The currency has been weakening since Tinubu used his inauguration speech last month to urge the central bank to close the gap between the country’s official and unofficial exchange rates.

The spread between the managed and parallel markets in Africa’s biggest economy can be as wide as 60%.

Read also: Naira falls 1.02% after closing steady for 7days at official market

President Tinubu’s call on the central bank to move toward a uniform rate has sparked expectations that the currency will be devalued to close the gap.

Fitch Ratings anticipates a phased-in exchange-rate liberalization, moving the official rate closer to a market-clearing level, which would ultimately represent a “positive development for Nigeria’s credit profile,” according to a note Thursday.