The Naira on Tuesday, January 30, plunged further at the official window as it closed at an all-time low of N1,482 against the US dollar.
It had earlier closed at N1,348 against the dollar a day before after the FMDQ Security Exchange reviewed the methodology used for the calculation of its rates.
This is coming as the Central Bank of Nigeria, CBN, released a circular to authorized dealers on financial market price transparency, warning them against engaging in sharp practices.
CBN, stated that its attention had been drawn to the practice of some dealers and their customers in reporting inaccurate and misleading information on transitions in the financial market.
It stated that the behaviour was not compliant with ethical standards and deliberate attempts to create price distortions by reporting false transaction details amounts to market manipulation which will not be tolerated and henceforth face sanctions.
Meanwhile, members of the organized private sector and economists have expressed concerns over the development. According to them, the fall of the local unit at the Nigerian Autonomous Foreign Exchange Fixing, NAFEX, window would likely lead to business shutdowns, job losses, hikes in the prices of commodities and services, and high inflation.
Economists and private sector bodies have also expressed worries over the fall in the value of the naira.
According to them, the depreciation of the naira at the official window to N1348.63 per dollar at the close of trading on Monday, January 29, had wider implications for the economy.
However, the naira plummeted further on Tuesday, falling to N1482.57 to a dollar as of the end of trading.
A day earlier, FMDQ Securities Exchange, which calculates the exchange rate of the country, revised the methodology used to set the exchange rate. This some experts believe is a technical devaluation of the national currency.
In a market notice, FMDQ stated, “This revision aims to address recent fluctuations and challenges encountered in the Nigerian Foreign Exchange Market, NAFEM.”
It noted that the new measures taken would ensure that NAFEX and NAFEM rates accurately reflect market conditions.
FMDQ Securities Exchange explained, “These revisions are focused on enhancing the accuracy and reliability of the NAFEX and NAFEM rates determination process, with a focus on data availability and integrity involving a rigorous data validation process, including tolerance checks which shall be applied by FMDQ Exchange, subject to internal policies and procedures.”
These moves by FMDQ and CBN were aimed at closing the gap between the official and parallel rates of the foreign exchange market. The NAFEM rate closed at N1348.63 to a dollar on Monday, a lot closer to the parallel rate which closed at N1,450 to a dollar.
On Tuesday, January 30, the naira closed at N1482.57 to a dollar as it represents a 9.93 percent decline from its rate a day earlier. On the parallel market, it remained stable at N1,450 to a dollar on Tuesday. On the cryptocurrency peer-to-peer market, the naira was trading for N1,439.5 to a dollar on Binance’s P2P platform as of the time of this report.
The naira’s latest decline on the official window is set to bear fresh consequences for the average Nigerian, experts have said. The naira continues to tumble despite the best efforts of the Central Bank of Nigeria, CBN, and Federal Government.
Recently, the CBN governor, Olayemi Cardoso stated that the national currency was currently undervalued, and that the bank was working to stabilize the exchange rate.
