The naira has hit an all-time low of N1,700 per dollar in the parallel market, raising concerns that the currency could plummet further to N2,000 if current trends continue. Experts point to ongoing FX shortages and CBN’s reform efforts as contributing factors.
The Nigerian naira continues its downward slide, reaching an all-time low of N1,700 per dollar in the parallel market. This alarming depreciation has sparked concerns that the currency may plunge further, with speculation growing that the naira could hit N2,000 per dollar if current trends persist.
On Friday, the naira depreciated by 1.49% compared to the N1,675/$ it traded at just a day prior. The ongoing devaluation is the lowest seen in seven months, with the last record being N1,730/$ on February 19. Street traders in Lagos quoted the buying rate of the naira at N1,680/$ and the selling rate at N1,700/$, with a margin of N20.
In contrast, at the official window, the naira appreciated by 2.24%, trading at N1,540.78/$ on Friday, compared to N1,576.1/$ on Thursday. However, this reprieve in the official market does little to dampen the anxiety in the parallel market, where the rapid devaluation has raised concerns about the currency’s future.
Currency experts believe that if the Central Bank of Nigeria (CBN) fails to stabilize the market, the naira may cross the N2,000 mark by the end of the year. This would exacerbate inflationary pressures and lead to further economic instability. Traders have pointed to the scarcity of dollars and ongoing foreign exchange reforms as key factors driving the currency’s downward spiral.
The CBN has been working on FX reforms since January 29, with the aim of streamlining exchange rates and reducing opportunities for arbitrage. Governor Olayemi Cardoso recently asserted that multiple interest rate hikes have restored confidence in the naira. However, with rising concerns in the parallel market, it remains to be seen if these measures will be enough to halt the slide.
As speculation mounts over the possibility of the naira hitting N2,000 per dollar, Nigerians are bracing for a challenging economic future, especially with the ongoing FX shortage and high inflation rates.
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