The naira traded at N955 to a U.S. dollar on Thursday, according to data captured from AbokiFX, an online application platform that provides daily updates and information on the parallel market.
This new rate of N955 to the greenback represents a significant drop in the value of the Nigerian currency, which opened trading in the black market on Monday at N890 to a dollar.
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The currency is just N45 away from hitting the N1, 000-to-dollar prediction that many macroeconomic analysts had predicted when President Bola Tinubu floated the currency.
Floating the currency is to reduce the gap between the official Importers & Exporters window and the parallel market rate, to the point where the unofficial exchange rate will tilt closer to the official market rate, as the president stated.
Unfortunately, the shortage of supply of the dollar has greatly hindered the ability of the Central Bank of Nigeria (CBN) to intercede in the market, thereby pushing the most legitimate demands to the black market. A situation that has exerted so much pressure on the Bureau de Change (BDC), which controls almost 95 percent of the transactions in the parallel market.
Manufacturers have been badly hit as the cost of production and business planning have been negatively impacted by this erratic change.
PricewaterhouseCoopers (PwC) had predicted in its “Nigeria Economic Outlook for August 2023” report that the month of August will experience much volatility in its FX market. In essence, that means the naira will not be stable as its price in the international FX market will fluctuate so much.
The impact is already being felt on Nigerians, as not only has the price of gas increased, but oil marketers have warned ahead of an increase in the pump price of fuel that sells way above N600 per litre in most parts of the country.
Apparently, the CBN is optimistic about a turn-around in the FX situation in the country, as it reported an inflow of $1.41 billion for the month of June only. A figure that most likely would have risen in the month of July following savings from the expensive fuel subsidy removal and increased crude oil exports.