The Nigerian Naira has reached a historic peak against the US dollar, hitting N1,607 in intra-day trading on February 15, 2024.
This surge comes amidst escalating demand pressure, further undermining the value of Nigeria’s currency. Meanwhile, the official exchange rate closed at N1,469.97 to $1 on the same day, highlighting the currency’s volatility.
In tandem with the currency’s volatility, Nigeria is grappling with a substantial surge in inflation. According to the National Bureau of Statistics (NBS), January’s inflation rate soared to 29.90%, indicating severe economic challenges facing the nation.
This alarming increase underscores the pressing need for effective measures to stabilize the economy and protect the purchasing power of citizens.
Despite the Central Bank of Nigeria’s (CBN) implementation of various policies aimed at bolstering the supply of foreign exchange (forex), the persistent demand pressure persists.
In response, the CBN announced several measures on February 15 aimed at promoting transparency and stability in the foreign exchange market while addressing forex malpractices.
These measures include policy changes such as directing authorized dealer banks to discontinue cash payouts for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA).
Additionally, international oil companies (IOCs) operating in Nigeria are now required to retain 100% of their forex proceeds within the country, rather than remitting them abroad immediately.
The domestic currency appreciated marginally at the end of the week by 0.34% to close at N1,498.25 to a dollar at the close of business, data from the NAFEM where forex is officially traded, showed.
- This represents an N5.13 gain or a 0.34% increase in the local currency compared to the N1,503.38 closed on Wednesday.
- The intraday high recorded a record high of N1607/$1, while the intraday low was N1100/$1, representing a wide spread of N507/$1.
- According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $323.41 million, representing a 174.37% crease compared to the previous day.
- However, the naira depreciated marginally at the parallel forex market where forex is sold unofficially, the exchange rate quoted at N1,565/$1, a decrease of 1.28% against N1,545 it closed the previous day,
- The Great British Pound (GBP) closed at £1/N1,910, a decline of 0.52% from £1/N1,900 recorded the previous day while Naira equally dropped against the Euro by 0.61% to close at N1630/EUR1 against NI620 / EUR1 reported the previous day.
In the cryptocurrency market where forex is sold using stablecoins, the Naira also settled at N1,613/$1.
Nairmetrics reported that the latest inflation report released by the National Bureau of Statistics (NBS), revealed that Nigeria’s inflation rate for January 2024 has surged to 29.90%, marking a significant increase from the 28.92% recorded in the preceding month.
The data reveals a notable uptick in the headline inflation rate for January 2024 by 0.98% points when juxtaposed with December 2023’s figures.
Delving into a year-on-year comparison, the inflation rate for January 2023 stood at 21.82%, showcasing a considerable leap of 8.08% points by January 2024, underscoring an escalated headline inflation rate over the same period in the preceding year.
Moreover, a closer examination on a month-on-month basis illustrates that the headline inflation rate for January 2024 ascended to 2.64%, outpacing the 2.29% observed in December 2023 by 0.35% points.
This increment elucidates a heightened rise in the average price level for January 2024 relative to the increase noted in December 2023, highlighting the growing inflationary pressures within the nation’s economy.