Nigeria’s legal tender, the naira now ranks as the third worst-performing currency globally, following a steep 70% loss in value against the dollar this year.
It currently trails only the Lebanese pound and the Ethiopian birr regarding depreciation.
On Monday, the naira weakened by 4.3%, hitting an all-time low of 1,670.65 per dollar, according to Bloomberg data. The decline was driven by a 72% drop in dollar liquidity to $81 million, marking the lowest level in over a month.
Low liquidity in Nigeria’s foreign exchange market has exacerbated the currency’s volatility as the country focuses on building its reserves, which reached $39.4 billion on October 24, the highest in two years.
However, Africa’s largest crude producer has struggled to stabilize its currency since it was floated in June last year, with falling oil production hampering foreign exchange inflows.
Finance Minister Wale Edun recently acknowledged the issue, noting that increasing crude output is essential for bolstering Nigeria’s foreign exchange reserves and strengthening the naira.
In a related development, experts have expressed concern as Nigeria’s currency, the Naira, continues its depreciation trend, with the exchange rate hitting ₦1,740/$1 in the parallel market after trading last weekend.
FocalPoint reports that the Naira exhibited stability with slight appreciation in the Nigerian Autonomous Foreign Exchange Market (NAFEM), as market participants speculate that the Central Bank of Nigeria (CBN) may intervene imminently to alleviate the pressure on the exchange rate.
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