The Nigerian naira has reached a new low in the parallel market, depreciating to N1,740 per U.S. dollar. This marks a significant decline from N1,739 the previous day, continuing a troubling trend for Nigeria's economy.
There has been an unprecedented demand for U.S. dollars among financial institutions and non-financial entities. This surge has intensified pressure on the naira, exacerbated by limited dollar inflows and slow foreign exchange disbursements from the Central Bank of Nigeria (CBN).
Despite recent reforms aimed at liberalizing the foreign exchange market, including adjustments to the official exchange rate initiated in June 2023, these measures have not stabilized the currency. The World Bank's latest report highlights that the naira has depreciated approximately 43% year-to-date, categorizing it among the worst-performing currencies in Sub-Saharan Africa alongside the Ethiopian birr and South Sudanese pound.
The declining value of the naira has led to rising domestic prices, particularly for imported goods. As inflation reached 32.70% in September 2024, driven by increased transportation costs and fuel prices, consumers are feeling the financial strain more than ever.
Recent data indicates a sharp drop in foreign exchange turnover, which fell by over 36% on October 15, from $343.71 million to $217.86 million. This decline suggests a tightening liquidity situation in the market, further complicating efforts to stabilize the naira.
The Nigerian government faces mounting pressure to address these economic challenges as citizens grapple with rising costs of living and diminished purchasing power. Analysts warn that without immediate and effective interventions, the naira may continue its downward trajectory.