The value of the Nigerian naira compared to the US dollar has dropped significantly in the unofficial market, reaching about N1,745 for every $1. This change has wiped out the recent improvements seen last week when the naira was trading for less than N1,600 per $1.
Earlier reports indicated that the naira was trading around N1,685/$1. Meanwhile, its value dropped quickly when businesses fully restarted this week. At 10 a.m. on Wednesday, December 11, it was found that some exchange rates were higher than N1,700 per dollar. This suggests that the improvements seen last week might have been temporary, like what people call a “dead cat bounce,” which means a quick, short-term recovery in a market that’s still falling.
Parallel and Official Exchange Rates
Rates across various platforms painted a consistent picture of the naira’s weakening:
- P2P (person-to-person) trading has rates around 1,715 naira for 1 dollar.
- IMTOs (services that send money internationally) have rates as high as 1,745 naira for 1 dollar.
- Stock trading platforms like Bamboo and Trove show rates between 1,730 and 1,736 naira for 1 dollar.
On Tuesday, December 10, the official exchange rate closed at N1,525 per dollar, which is the highest the naira has been since the Enhanced Foreign Exchange Market (EFEM) was introduced. The difference between the official rate and the parallel market rate has grown to more than N200, causing worries about the growing gap between these two parts of the foreign exchange market.
Market Reactions and Speculations
Bureau De Change (BDC) operators suggested that the recent drop in the value of the naira is due to speculation. Even though the Central Bank of Nigeria (CBN) has tried to stabilize the market by creating a stronger trading system, speculators seem to have a big impact on unofficial exchange rates.
