Nigerian naira hits record low on black market, despite expected forex inflows
The Nigerian naira hit a record low of 1,300 per dollar on the black market on Thursday, despite the government’s expectation of $10 billion in foreign currency inflows in the next few weeks.
The naira’s depreciation on the black market is being driven by thin trading volumes and dollar shortages on the official market. The currency has been in free fall on the unofficial market since currency restrictions were lifted on the official market last month.
Last month, the naira slid past 1,000 naira per dollar on the black market and has continued to weaken. On Monday, central bank governor Yemi Cardoso said the naira will adjust once rules for market participants are made clear.
Finance Minister Wale Edun also said on Monday that Nigeria was expecting $10 billion in foreign currency inflows in the next few weeks to improve foreign exchange market liquidity.
He said, without elaborating, that the inflows would come from the issuance of instruments in dollars, oil sales and foreign investments.
On the official market, the naira recovered to 775 to the dollar from a record low of 999 it touched last week.
The prospect of foreign exchange inflows has slowed the naira’s depreciation on the official market, but it is still losing ground on the black market due to thin trading.
Economists say the government needs to do more to address the underlying causes of the naira’s weakness, such as the country’s high import bill and its reliance on oil exports.
They also say the government needs to improve transparency and communication in the foreign exchange market.