• Saturday, February 24, 2024
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More misery for Nigerians as Naira sinks to record low

Naira loses 1.82% despite steady rise in dollar supply

Nigeria’s currency fell to a record low in the parallel market on Tuesday due to persistent dollar shortages and increased demand for the greenback.

The unit declined 1.5% to 1,305 naira per dollar, compared with a day earlier, according to Abubakar Mohammed, chief executive officer of Forward Marketing Bureau de Change Ltd., which compiles data on the informal market in Lagos. That led the gap over the official rate, which closed at 838 naira on Monday, to widen to 36%, according to FMDQ, which tracks exchange rates for the West African nation.

“Dollar demand has risen steadily since the start of January, from businesses that want to restock goods or their raw materials as well as individuals needing dollars for studies abroad,” Mohammed said by phone from the commercial capital, Lagos. “In all of these, you can’t find the dollar.”

Africa’s most populous nation is facing acute foreign-currency shortages despite efforts by authorities to improve supply. President Bola Tinubu introduced foreign-currency reforms in June, contributing to the naira depreciating by about 50% against the dollar last year and causing many of Nigeria’s biggest companies to declare losses after revaluing oversea loans and letters of credit using the weaker exchange rate.

The central bank’s Governor Olayemi Cardoso has promised to clear a backlog of forward foreign-exchange contracts estimated at between $7 billion and $10 billion to boost investor confidence and lure inflows.

Last week the government received $2.25 billion from a syndicated loan arranged by African Export–Import Bank to help stabilize the foreign-exchange market and will later get a further $1.05 billion.

Dollar liquidity at the official foreign-exchange market declined by 69% on Monday to $26.37 million, investment bank Chapel Hill Denham said in emailed note on Tuesday.