Tsunami hits naira as it trades at N730 to dollar

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  • The Nigerian currency hit a historic low of 730 naira per dollar in the parallel market on Thursday, September 29, 2022
  • On Wednesday, the naira was trading at 733 naira to the dollar on the parallel market, a further drop from where it was trading the day before.
  • The drop came despite the CBN’s recent 15.5% rate hike and the system catching up on excess liquidity to save the naira

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The rising strength of the US dollar is having severe negative effects on Nigeria’s local currency despite measures taken by the Central Bank of Nigeria to mop up excess liquidity in the system.

The recent actions taken by the CBN were supposed to prevent the naira from depreciating further.

Read also

CBN issues guidelines for banks to raise interest on savings deposits after 15.5 rate hike

Naira and dollar, Exchange rate
CBN Governor Godwin Emefiele displaying the N100 banknote Credit: Pius Utomi-Ekpei
Source: Facebook

Continued decline despite CBN interventions

On Thursday, September 29, 2022, the exchange rate between the naira and the US greenback fell to an all-time high on the black market, trading at 730 naira per dollar.

The naira deteriorated by 0.69% from the previous day.

Information collected from parallel market operators indicates that the decline is due to the scarcity of the dollar, which has put pressure on the local currency.

The drop in the exchange rate comes after the CBN raised the interest rate to 15.5%, the highest since 2002. The rate hike represents an addition of 150 basis points from the 14% started in the previous meeting of the MPC.

According to reports, N730 per dollar is the highest in the history of the naira, while traders said they sold dollars as low as N75 and bought at N725 and N75 per dollar.

Read also

CBN gives commercial banks 48 hours to deposit more N6trn customer deposits into its account

Fourteen months ago, the CBN started selling currencies to money changers, but the naira has been falling ever since as liquidity tightens.

The peer-to-peer crypto market is also taking a hit

The naira in the peer-to-peer cryptocurrency market fell to N735 per dollar from the N733 it traded the previous session.

Trading on the official market saw the naira trading for 436.37 naira per dollar on Wednesday, September 28, 2022, a marginal decline of 0.01% from 436.33 naira recorded the previous day.

A total of $119.49 million in currency traded on the official market on Wednesday, September 28, 2022, was 20.17 percent higher than the $99.43 million traded the previous day.

A total of $297.02 million was traded on the official market, closing in on the $534.35 million sold the previous week. However, the CBN has maintained currency stability in the official foreign exchange market through its constant intervention, helping the country’s foreign exchange reserves.

Read also

CBN hikes interest rates to 15.5%, highest in 20 years

CBN data shows that Nigeria’s foreign exchange reserves have shrunk by more than $2 billion since the start of the year to $38.36 billion, from over $40 billion recorded at the end of 2021.

Huge black market gap, forex scam as official exchange rate rises as banks release more names, leads Zenith

Remind that Legit.ng reported that The widening gap between the black market and official rates has worsened forex fraud as banks release more names of Nigerians trying to cheat the system in a bid to make more money.

As of Wednesday, February 23, 2022, the dollar was trading against N416 on the official market and N575 on the black market. This is a deviation of more than N159.

Checks of the websites of ten commercial banks reveal that more than 1,226 identities have been revealed so far.

Source: Legit.ng

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