Naira Hits Record Low, Closing Gap Between Official and Black Markets Rates

The naira has witnessed a significant plunge at the official market, reaching an all-time low record of N1,099.05 per dollar at the Nigeria Autonomous Foreign Exchange Market (NAFEM) as at Friday, November 8, 2023

This depreciation narrowed the exchange rate gap between the official and parallel markets to N99 per dollar.

Meanwhile, the black market, also known as the parallel, traded at N1,198 per dollar on the same day. Which marks a closure of the disparity between the two markets by N99, reflecting the government’s concerted effort to achieve unified FX rates by the end of the year.

Report has it that the current exchange rate gap of N99 contrasts sharply with the N1.83 per dollar disparity witnessed on June 21, 2023, after the Central Bank of Nigeria (CBN) unified the rate windows.

Further analysis reveals that the spot trading rate has also tightened, closing the gap between the official and black markets to N22 per dollar as of December 7, 2023. Noting that, the parallel market aslo recorded a rate of N1,198 per dollar on December 8, 2023.

The CBN’s decision to collapse all Forex market segments into NAFEM on June 14, 2023, has played a pivotal role in these developments. The move aimed at streamlining transactions through a willing buyer and a willing seller model, effectively closing all other windows.

In pursuit of stabilized rates, the Nigerian government set targets which aim for an exchange rate range of N650 to N750 per dollar by the close of the current year.

As the disparity between official and black market rates narrows, market observers closely watch the unfolding dynamics, anticipating the potential impact on the nation’s economic landscape.