The official market in Nigeria experienced a notable decline on Tuesday due to the unprecedented depreciation of the naira in relation to the US dollar.
The problem was made worse by thin trading conditions, which resulted in severe oscillations similar to those seen in the unauthorized parallel market, where the currency trades with more flexibility.
The naira fell to as low as N1,248 versus the dollar during mid-day trade, according to LSEG data. This came after its N927 opening rate earlier in the day.
Later in the trading session, the currency showed some strength and rebounded to N845.
The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, recently declared that he intends to let market forces determine exchange rates.
He emphasized the necessity of clear, transparent rules guiding the functioning of the market.
The naira’s official exchange rate gradually converged towards values seen in the parallel market as a result of these comments as well as ongoing dollar shortages in the official market.
On the parallel market, the currency was trading for about N1,225 as of Tuesday. On the other hand, the market for one-month non-deliverable forwards priced it at N1,002.50, Reuters reported, indicating the complex dynamics and disparate pricing across several trading platforms.
