In a significant development, the Nigerian Naira experienced a sharp depreciation on Wednesday, plummeting to an unprecedented low of N1,830 against the US dollar in the black market, signaling distressing economic challenges.
This dramatic decline represents a staggering 7.10% decrease or N130.00 weaker compared to the previous day’s closing rate of N1,700. The Naira’s freefall to this historic low underscores the severity of the current economic crisis, marking the lowest point in the currency’s historical performance.
Despite efforts by the Central Bank of Nigeria (CBN) to stabilize the forex market through various policies aimed at boosting foreign exchange supply, the Naira’s continuous devaluation persists, exacerbating concerns among citizens and investors alike.
Moreover, recent data released by the National Bureau of Statistics (NBS) revealed a significant surge in inflation, with the inflation rate soaring to 29.90% in January 2024 from 28.92% in the previous month. This alarming increase indicates a substantial uptick in the headline inflation rate, reflecting the growing economic strain faced by Nigerians.
The Naira’s decline against major international currencies further compounds the economic woes, with the British Pound (GBP) also experiencing a downturn. The Pound dropped to £1/N2,210 from £1/N2,120 recorded the previous day, marking a notable decrease of 4.07%. Similarly, the Naira weakened against the Euro by 2.43%, closing at N1855/EUR1 compared to N1810/EUR1 reported the previous day.
In the cryptocurrency market, where forex is traded using stablecoins, the Naira settled at N1,876.50 per US dollar as of 12 pm. Reports from Nairametrics indicated that the cryptocurrency trading platform Binance has imposed restrictions on trading the Nigerian currency for the USDT stablecoin, citing unusual currency movements.
Binance clarified that its actions were aimed at safeguarding users and preventing abuse, distancing itself from Nigeria’s forex challenges, stating that its platform is market-driven and not intended to dictate currency pricing.
This development comes amid unconfirmed reports suggesting that the Central Bank of Nigeria (CBN), in conjunction with other government agencies, may have instructed Binance to impose limits on Nigerian traders selling USDT. As the nation grapples with the economic downturn, stakeholders are closely monitoring developments, seeking viable solutions to mitigate the crisis and restore stability to the forex market.
Credit: Nairametrics
