Naira continued its free fall on Tuesday, sinking to a record low of N1,482.57 per dollar following strong demand on the official market, also known as NAFEM.
The plunge was despite current moves by the Central Bank of Nigeria to address the backlog of verified foreign exchange transactions.
The latest move being the apex bank’s conclusion of the payment of all verified claims by airlines with an additional $64.44 million to the concerned airlines.
This represents 9.03% or N133.95 weaker than N1,348.62 recorded at the close of trading on Monday.
The latest development is unprecedented and stands as the lowest point in the historical performance of the Naira, as the depreciation exceeded N1,455 quoted on the parallel market as par Nairametrics tracker.
The domestic currency depreciated by 9.03% to close at N1,482.57 to a dollar at the close of business, data from the NAFEM where forex is officially traded, showed.
- This represents an N133.95 loss or a 9.03% decline in the local currency compared to the N1,348.62 it closed on Monday.
- However, the naira depreciated at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 0.34%, quoted at N1,455/$1, while peer-to-peer traders quoted around N1,481.70/$1.
What you should know
The Central Bank of Nigeria (CBN) has said that it has fulfilled its promise by clearing $64.44 million backlog of foreign exchange owed to airlines.
This latest disbursement brings the total verified amount paid to airlines to $136.73 million, marking a complete settlement of verified forex claims in the sector. However, this payment is 17% of the $800 million owed to airlines.
CBN restates commitment to clearing FX backlog
In a statement on Tuesday, Mrs. Hakama Sidi Ali, the CBN’s Acting Director of Corporate Communications, affirmed that Governor Olayemi Cardoso and his team are laser-focused on tackling outstanding obligations across other sectors, leaving no one behind.
She added that the CBN aims for a robust and liquid forex market, further warning participants against manipulative activities that could harm the Naira. Instead, she called for collaborative efforts and adherence to regulations to ensure market forces rightfully determine exchange rates.
The statement read:
- “According to her, the Governor, Olayemi Cardoso, and his team were doubly committed and would stop at nothing to ensure that the verified backlog of payments across all other sectors was cleared and confidence was restored in the Nigerian foreign exchange market.
- “Furthermore, she assured that the CBN was working with stakeholders to ensure liquidity improves within the forex market, thereby reducing pressure on the Naira.
- “While expressing optimism that the market would respond positively with the latest injection of over $64 million, she admonished actors in the foreign exchange market to guard against speculation as such actions could hurt the Naira.
- “Sidi Ali, therefore, urged the public to support the reforms in the foreign exchange market, adding that the CBN would continue to promote orderliness and professional conduct by all participants in the Nigerian Foreign Exchange Market to ensure market forces determine exchange rates.”