Fresh Panic Demand for Dollars Crashes Naira to N800/$1

By Dipo Olowookere

The exchange rate of the Naira to the American Dollar at the parallel market is beginning to worsen again after the initial ease in pressure.

Business Post reports that the Nigerian legal tender was traded with its United States counterpart in the unauthorised segment of the foreign exchange (FX) market on Tuesday afternoon at N800/$1 in Lagos, in contrast to N755/$1 it was transacted on Monday, indicating a decline of N45 or 5.96 per cent.

There was jubilation last week when the Naira gained strength against the greenback, but this has been short-lived, following a fresh panic demand for Dollars by Nigerians and others.

“You see, the gains recorded by the Naira last week were triggered by fake news, I believe was planted by the government.

“It was speculated that the American government was planning to render Dollar bills printed below 2021 as invalid, and this forced those hoarding the Dollars at home to take them to the black market.

“This improved the supply of forex in the market, but when people realized that the information was false, the Naira began to suffer. This is the reason for the gradual decline in the value of the Naira to the Dollar,” a financial analyst based in Lagos, Mr Sakiru Adediran, told Business Post.

“Remember I told you recently that the appreciation the Naira was recording last week would not last long. Is it not happening now?” a currency trader in the Egbeda area of Lagos, Alhaji Isa, asked this reporter.

On October 26, 2022, the Central Bank of Nigeria (CBN) announced that it was redesigning the Naira notes. This caused hoarders of the local currency to demand greenbacks to boycott the financial system’s scrutiny. This pressure on the Naira weakened its value in the parallel market to more than N900/$1.

But last week, after information went out that Dollars printed below 2021 would longer be acceptable for financial transactions, the local currency appreciated.