Nigerian naira hits record black market low

The sudden freefall of the Nigerian Naira versus the US dollar has caused widespread shock and alarm in the banking and investment industries.

Nigeria's naira hit a record low of 1,200 per dollar on the black market, online platform abokiFX showed, a day after the currency hit a new low on the official market due to persistent dollar shortages.

The naira has been in freefall on the unofficial market, where it trades freely, which worsened after currency restrictions were lifted on the official market.

Last month, the currency slid past 1,000 naira per dollar on the black market and continued to weaken as excess dollar demand is funnelled into the informal market from the official market.

Africa’s largest economy currency traded lower at N1,330 to a dollar recently for those that demanded wired transfer.

“The dollar is not available because now the BDC operators can only get FX from customers and at the moment customers are controlling the market so if you want to buy from a customer, he will not agree to the Central Bank of Nigeria (CBN) rate. says Bureau de change (BDC) operator, Ishaq Ammar Sulaiman.

Some say the naira depreciation is attributed to persistent dollar shortages in the financial system, and being driven by new demands as import bills rose on 43 unbanned items recently by the Central Bank of Nigeria (CBN).

Aliyu Audu, an Economist said what is happening now is that Nigeria has a new administration and the team is trying to get a grasp of the economy and possibly missed some steps.

“Why is the country demanding dollars? We demand dollars to import and buy goods and services and that is why we have increased the value of the dollar and the Naira is depreciating,” he added.

According to Aliyu, Nigeria has no part in importation adding that the country should look back to the 80s and the policies operational then.

“Let's strengthen local companies like Innoson motors, let every government official use Innosen vehicles, this will stop the demand for Toyota. And in the long run, stop demanding dollars, and substitute whatever we consume with local goods under import substitution industrialization. 

Then we will notice that the dollar will crash because if you don’t demand dollars, it will be in high supply. This is what we need to do to the economy, the long-term measure is we need to increase production, we need to be self-reliant, that is what other countries are doing,” he said.

Experts say the continued loss in value of the Naira poses huge repercussions for the entire 15-member ECOWAS bloc, and not just Nigeria.