Nigerian Currency Redesign Controversy: Naira Slips by Almost 20%, Experts See Exchange Rate Reaching 1,000:1 USD Before Year End
The Nigerian currency appeared to accelerate its decline versus the U.S. dollar after it slipped to a new low of 900 naira for every dollar. The currency has continued to depreciate even after the Economic and Financial Crimes Commission’s raid on suspected illegal foreign exchange dealers. Continuing U.S. Dollar Shortages
Following the Oct. 27 announcement by the Central Bank of Nigeria (CBN) that intends to put into circulation newly designed naira banknotes, the local currency’s parallel market exchange rate versus the dollar has slipped by almost 20%. From an exchange rate of around N760:$1 at the time of the announcement, the naira had, by Nov. 2, dropped to a new all-time low of 900:1.
As noted by several local media reports, the CBN’s decision to release the new banknotes as well as to demonetize the current 100, 200, 500, and 1,000-naira banknotes after Jan. 31, 2023, has sparked a rush to buy the greenback. According to one report, the shortage of the U.S. dollar on both the official market as well the parallel market has increased pressure on the naira.
Despite receiving the backing of President Muhammadu Buhari, the CBN’s currency redesign plans have seemingly failed to halt the naira’s slide.
One Nigerian economic expert, Andrews Elueni, the managing director at Flawless Capital Limited, was recently quoted suggesting that the naira’s exchange will slip past the N1,000:$1 mark before the end of 2022.
“It will get to N1,000 before the end of the year, the reason being that there is a lot of fraud and corruption in the system,” Elueni reportedly said.
Official and Parallel Market Gap Widens to 450
Despite the naira’s accelerated slide versus the dollar on the parallel market, Nigerian monetary authorities continue to keep the naira pegged at just under 450 per dollar.
Meanwhile, following the CBN announcement, Nigeria’s anti-graft body, the Economic and Financial Crimes Commission (EFCC) warned the public it would pounce on suspected illegal currency dealers. Since then, local media reports suggest the EFCC has raided bureaux de change operators who stand accused of fueling illegal foreign exchange activities.
According to one report, when the EFCC pounced, the naira’s parallel market exchange rate stood at 840:1. However, more than 24 hours later, the gap between the currency’s parallel and official market exchange rates had widened to a new high of N450.
Register your email here to get a weekly update on African news sent to your inbox:
Tags in this story Andrews Elueni, Central Bank of Nigeria (CBN), Economic and Financial Crimes Commission (EFCC), Exchange rate, naira depreciation, President Muhammadu Buhari
What are your thoughts on this story? Let us know what you think in the comments section below. Terence Zimwara
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route. While Official Figures Claim Turkey’s Inflation Rate Is 85%, Third-Party Stats Say It"s Closer to 200% ECONOMICS | 2 hours ago Silver Rallies 7% Rising Past $20 per Ounce, US Mint Says Fabricators Are "Struggling to Keep up With Demand" ECONOMICS | 8 hours ago
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleFoundry Academy Launches Training Program to Produce Top Technicians for BTC Mining Industry Next articleMicrosoft Backs Wemade’s Blockchain Push in $46 Million Investment Round Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItCentral Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year
The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.Fidelity Investments Launches Crypto, Metaverse ETFs — Says "We Continue to See Demand" Argentinian Securities Regulator Launches Innovation Hub to Discuss Regulated Crypto Investments UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Digital Ruble ‘Much Needed,’ Russia’s Central Bank Says, Won’t Delay Testing