Fun

Nigerian Currency Plunges to New Low of 570 — 10% of Value Lost in Under 30 Days

News Feed - 2021-09-17 06:09:45

Nigerian Currency Plunges to New Low of 570 — 10% of Value Lost in Under 30 Days


The Nigerian currency, the naira, plunged to a new all-time low of N570 for every dollar on September 16, 2021. This new exchange rate means since August 17, the naira has now lost about a tenth of its value on the foreign currency black market. Naira Overvalued


In spite of this plunge, which has been attributed to the biting shortage of foreign exchange, authorities insist the naira’s real exchange is unchanged at N411 for every dollar. This means forex buyers that source this commodity on the parallel market are now paying a premium of over N150.


Alternatively, the new parallel market exchange rate of N570 may suggest that the Central Bank of Nigeria (CBN) is now overvaluing the naira by 40%. In fact, this latter point appears to be corroborated by comments made by the CBN governor, Godwin Emefiele. In his comments to a group of investors in late June 2021, Emefiele suggested at the time that the naira was overvalued by 10%. He also hinted that devaluation of the naira was in the cards.


However, since then, the naira’s official exchange rate has remained unchanged while the currency’s rate of depreciation on the parallel market appears to have accelerated, particularly in the past few weeks. Meanwhile, the central bank’s unwillingness to devalue the naira may have created more problems for the CBN — the hoarding of foreign exchange.


Foreign Exchange Hoarding


As an investigation by the Daily Trust found, “some people and corporate entities in Nigeria are now saving their fortunes in dollars.” In its report, the publication quotes Malam Nura, a Bureau de Change operator, who said: If importers don’t have dollars, and if the naira keeps falling, they may not be able to import and their businesses may be affected. I think this is why they are buying and holding it so that they can have enough for import for a long period.


Bitcoin.com News has similarly reported that Nigerians were accumulating foreign currencies in order to shield their wealth from the naira’s depreciation.


Aside from worsening the country’s already precarious foreign exchange situation, the naira’s continuing depreciation is believed to be fueling Nigeria’s inflation woes. While data shows that the country’s headline inflation dropped to 17.01% in August, a report by Proshare attributes this to “base year effects.”


Regarding Nigeria’s monthly inflation increase, the report concludes that this could be tied to the naira’s “weakness in the forex market” and that this is now “being transmitted into [rising] domestic prices.”


What should the CBN do to stop the naira’s fall? Tell us what you think in the comments section below. After Fed Members Disclose Million-Dollar Stock Trades Fed"s Powell Initiates Ethics Inquiry ECONOMICS | 4 hours ago Sources With Ties to Washington Say Joe Biden Will Renominate Fed Chair Jerome Powell ECONOMICS | 2 days ago Tags in this story Central Bank of Nigeria, Foreign exchange, forex market, Godwin Emefiele, naira depreciation, naira devaluation, Nigeria inflation, parallel market


Image Credits: Shutterstock, Pixabay, Wiki Commons 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

News Feed

SEC requests extra $158M from federal budget to police crypto’s ‘Wild West’
Jesse Coghlan6 hours agoSEC requests extra $158M from federal budget to police crypto’s ‘Wild West’Part of the funds would hire staff across SEC divisions, with one job dedicated to crypto and another to help with
Yield-bearing Treasury-backed stablecoin USDY launches on Aptos
Vince Quill10 hours agoYield-bearing Treasury-backed stablecoin USDY launches on AptosStablecoin issuers are becoming some of the largest buyers of United States government debt at a time of increased de-dollarization.42
Trump Backs Bitcoin in Latest White House Speech – Best Crypto to Buy Before the Next Bull Run
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Honduras gains new support in $11B tussle with crypto island Próspera
Jesse Coghlan5 hours agoHonduras gains new support in $11B tussle with crypto island PrósperaEconomists wrote a letter to “commend” Honduras’ decision to withdraw from an international court where it has been figh
CFTC Prepares to Step up Oversight of Crypto Market — Says Many Digital Assets Are Commodities
CFTC Prepares to Step up Oversight of Crypto Market — Says Many Digital Assets Are Commodities The Commodity Futures Trading Commission (CFTC) has shared with Congress its plans
Turkey’s Inflation Rate Surges to 70%, Monthly Rate of Change Now 7.25%
Turkey"s Inflation Rate Surges to 70%, Monthly Rate of Change Now 7.25% The latest data from the Turkish Statistical Institute (TSI) shows that rising transportation and food costs
Hackers Hit Romanian Hospital, Demand Bitcoin Ransom
Hackers Hit Romanian Hospital, Demand Bitcoin Ransom A hospital in Romania has been targeted in a ransomware attack with the perpetrators seeking payment in cryptocurrency to decry
BIS Releases Report On ‘Project Icebreaker’ — Develops Cross-Border Retail CBDC Payment Model
BIS Releases Report On ‘Project Icebreaker’ — Develops Cross-Border Retail CBDC Payment Model The Bank for International Settlements (BIS) has released a report summarizing t
Buy Bitcoin Now? Not Yet—Analyst Says Time Holds The Key
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Uruguay Introduces Cryptocurrency Law in Parliament
Uruguay Introduces Cryptocurrency Law in Parliament A new cryptocurrency bill project was introduced by the executive power to the Parliament of Uruguay. The bill seeks to clarify
Tom Blackstone4 hours agoStake hack of $41M was performed by North Korean group: FBIAfter investigating, the FBI concluded that the hack of crypto gambling site Stake was carried out by North Korean hackers Lazarus Group
Tom Mitchelhill3 hours agoDoorDash launches AI bot to take customer takeout ordersDuring peak times, DoorDash’s AI system will take the load off restaurants by automatically answering incoming phone calls.685 Total vie