The Nigerian Naira has experienced an unprecedented depreciation, reaching a record low of N1,410 per dollar on the black market. This marks a 3.29% or N45.00 drop from the previous day’s closing rate of N1,365.
Experts say the sharp decline reflects the severity of the current economic challenges faced by the country.
Market analysts attribute the significant depreciation to a surge in demand for dollars observed since the beginning of January.
Key contributors to this heightened demand include businesses actively restocking goods, individuals funding overseas studies, and the departure of diaspora Nigerians following the holiday season.
Businesses seeking to replenish stock and acquire raw materials have driven a substantial portion of the increased demand for foreign exchange. Additionally, individuals pursuing education abroad and Nigerians returning to their foreign bases have contributed to the surge in demand.
The departure of diaspora Nigerians, particularly after the holiday season, has also played a role in the increased demand for foreign currency.
With schools abroad reopening, international students are actively restocking their foreign currency reserves to cover impending school fees and related expenses. Students are also securing funds for holiday allowances, contributing to the heightened demand.
The observed depreciation stands as the lowest point in the historical performance of the Naira against the US dollar, raising concerns about potential economic repercussions.
The Central Bank Governor, Mr. Yemi Cardoso, recently stated that the Naira is undervalued, expressing the bank’s commitment to working towards genuine price discovery in the foreign exchange market.
Cardoso also emphasized the central bank’s dedication to inflation-taming policies and collaboration with the fiscal side of the economy. He assured a coordinated approach to achieve a balanced and stable exchange rate.
