By Chimaobi Afiauwa, Abuja
As Nigerians grapple with soaring hyperinflation, the nation’s currency faces a grim situation in the foreign exchange market, plummeting to an unprecedented low of N1,105 against the dollar.
This decline occurred at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the Central Bank of Nigeria (CBN) approved official market, as reported by Daily Trust.
Within hours of trading, the naira depreciated by over N200 from its opening rate of N830, closing at 841.14 on Thursday, a situation described by Reuters as bringing the official exchange rate close to the parallel market rate.
Some Bureau De Change (BDC) spots in Abuja visited by MUK TV, recorded the naira exchanging as high as N1,200 to a dollar in the parallel market.
In an interview with an Economist, Public Policy Analyst, and politician, Mascot Uzor Kalu, the deteriorating naira value was attributed to the government’s rate policy.
Kalu criticized the concept of a floating rate for third-world countries, stating that it disrupts their monetary policy, especially when they lack industrialization or manufacturing capabilities.
“Third world countries shouldn’t have a floating rate because most of them, ‘re not industrialized or manufacturing countries. So having a floating rate is destroying your monetary policy,” he said
The US-trained economist also expressed disappointment in the Central Bank of Nigeria (CBN) for not adjusting the exchange rate when the naira showed significant disparities between the official and market rates, implying a disconnection from the currency’s actual value.
“As of May, the naira was exchanging between N415-N420 at the official exchange rate and N700 at the market rate. So when you’ve such a huge disparity, it’s as if you’re in denial of what the actual value of your currency is,” Kalu added.
