The official Nigerian Autonomous Foreign Exchange Market witnessed a significant downturn on Monday as the naira reached a new all-time low, exchanging at N1,534/$. This marks a notable decline of 3.93 per cent or N58 from its previous closing rate of N1,476.13/$ last week Friday, as reported by FMDQ Exchange, the platform responsible for publishing official foreign exchange trading in Nigeria.
This latest official rate represents the weakest level the naira has ever reached since the Central Bank of Nigeria adopted a floating exchange rate system in June 2023. In contrast, on the parallel market, the naira traded between N1,480 and N1,490 on Monday. It’s worth noting that the local currency has been consistently trading higher at the parallel market, particularly since the FMDQ revised its methodology for calculating the official exchange rate.
The adjustment in the calculation method for the official exchange rate has contributed to the depreciation of the naira, which has transitioned from trading at over 900/dollar to over 1,400/dollar. In December, the naira surpassed the N1000/$ mark on the official window, hitting an all-time low of N1,099.05/$ on December 8. Subsequently, it closed at N1,043.09/$ on December 28, 2023, and at N1,035.12/$ on January 3, 2024. Further declines were observed with rates such as N1,089.51/$ on January 9, and N1,082.32/$ on January 10, 2024. The naira also reached an unprecedented low of N1,348.63/$ on January 30, 2024, coinciding with the FMDQ’s revision of its official exchange rate calculation methodology.
Moreover, there was a significant reduction in dollar sales by banks, which plummeted by 56.58 per cent to $253.77 million on Friday from the peak of $584.53 million recorded on the first trading day after the CBN’s directive to banks to sell excess dollars in the official FX market. In total, commercial banks sold $1.97 billion over the course of one week.
In Abuja, Bureau De Change operators quoted buying rates for the dollar ranging between N1,480 and N1,490, with selling prices set at N1,500 and N1,503, resulting in a profit margin of N23. Notably, some operators, like Mallam Yahu in Wuse, indicated buying rates as high as N1,480 to N1,490, while sellers like Yahaya Abdul stated their reluctance to purchase beyond the rate of N1,460.