On Thursday, September 29, 2022, Nigeria’s currency reached an all-time low of N730 to the dollar in the parallel market. On Wednesday, the naira exchanged for N733 to the dollar in the parallel market, a decrease from the previous day.
The drop occurred despite the CBN’s recent 15.5 percent rate hike and the removal of excess cash from the system in order to save the naira. Despite moves by the Central Bank of Nigeria to mop up excess liquidity in the system, the rising strength of the US dollar is having a severe negative impact on Nigeria’s local currency.
The CBN’s recent actions were intended to prevent further naira depreciation.
Despite CBN interventions, the market continues to fall. On Thursday, September 29, 2022, the black market exchange rate between the naira and the US dollar reached a new low, trading at N730 per dollar.
The naira fell 0.69 percent against the dollar the previous day. According to information gathered from parallel market operators, the fall was caused by a scarcity of dollars, which put pressure on the local currency. The drop in the exchange rate comes after the CBN raised interest rates to 15.5%, the highest level since 2002. The rate increase is a 150 basis point increase from the previous MPC meeting’s 14% starting point.
According to reports, the N730 per dollar is the highest in the naira’s history, with traders claiming to have sold dollars for as much as N75 and purchased at N725 and N75 per dollar. The CBN began selling forex to Bureau de Change operators 14 months ago, but the naira has been steadily declining since as liquidity tightens.