The Nigerian naira has tumbled to an unprecedented low, trading at N1,700 per dollar in the parallel market on October 14, 2024. This marks a 0.29% decline from its previous rate of N1,695/$1 recorded just days earlier, despite a surge in crude oil prices, which have now surpassed $80 per barrel.
While the parallel market saw a significant drop, the naira remained relatively stable in the official Investors and Exporters (I&E) window, closing at N1,641.27/$1. However, this still represents a 1.14% depreciation from its earlier rate of N1,622.57/$1.
The growing disparity between the official exchange rate and the parallel market continues to expose the pressure on Nigeria’s foreign exchange system.
The naira has experienced a steep decline throughout 2024, losing over 50% of its value since January, when it traded at N907.11/$1. By October, the currency had crossed the N1,500/$1 threshold. After a temporary recovery in March to N1,303/$1, the currency has been on a consistent downward slide.
Key Data Points:
Parallel market rate: Naira dropped to N1,700 per dollar on October 14.
I&E window: Closed at N1,641.27/$1, marking a 1.15% drop from N1,622.57/$1.
Trading volume: Surged to $616.73 million, indicating rising demand for dollars.
Despite global oil prices climbing above $80 per barrel, the naira continues to weaken, largely due to a persistent shortage of dollars, inflationary pressures, and reliance on the parallel market. While higher oil prices would typically provide relief for oildependent economies, Nigeria’s foreign exchange system remains under strain.
Though the naira’s breach of N1,700/$1 is concerning, there is hope for a shortterm rebound. Rising oil prices and new economic policies aimed at curbing demand for foreign exchange may help stabilize the currency, with a potential return to the N1,600/$1 range. However, the broader economic environment, including inflation and forex supply, will determine the naira’s future trajectory.