Naira Devaluation, Naira Weakens Against US Dollar as CBN Continues Plan to Achieve President Bola Tinubu Dreams.
The Naira’s depreciation against the US dollar continues, with new data revealing a 2 percent decline in the official market. This trend is also observed in the unofficial foreign exchange market. President Bola Tinubu is determined to bridge the gap between the official and unofficial market exchange rates.
President Bola Tinubu is working towards unifying Nigeria’s exchange rate, and as part of this effort, the Central Bank of Nigeria has allowed a 2% depreciation of the Naira against the US dollar. According to Reuters, on June 7, 2023, the apex bank authorized traders to exchange the Naira at a weaker rate of 476 Naira per dollar, reaching a new all-time low on the official market. As a result, investors and exporters had to pay N470,000 to purchase $1,000 on that day. However, by the end of the market hours, data from FMDQ securities indicated a recovery in the Naira’s value, with an exchange rate of N464.67 to a dollar.
Nigeria has been facing the challenge of unifying its multiple exchange rate system, and President Tinubu is determined to address this issue. To prevent a large-scale devaluation, the Central Bank has been gradually adjusting the Naira’s value on the official market. Recent speculation arose when the bank sold dollars at 645 Naira during its Friday auction, leading to expectations of an imminent devaluation that would bring the official exchange rate closer to the auction level. However, the Central Bank promptly denied the rumors of a massive devaluation.
In the unofficial foreign exchange market, both the black market and the Peer-to-Peer (P2P) segments have experienced no changes. The Naira depreciated by N2 against the Dollar in the black market, resulting in a selling rate of N752/$1, compared to N750/$1 in the previous session. Similarly, within the P2P forex window, the Nigerian currency declined by N5 against the greenback, resulting in a settling rate of N770/$1, as opposed to the previous value of N775/$1.
Furthermore, a report reveals a significant decline in the Nigerian Naira’s exchange rate against the United States dollar during President Muhammadu Buhari’s eight-year tenure. Calculations show that the Naira weakened by 57.26% and 37.58% in the official and black markets, respectively. When President Buhari assumed office in 2015, data from the Central Bank of Nigeria’s official window indicated an exchange rate of N197/$ against the US dollar.