The Nigerian naira reached a record low against the US dollar on Tuesday, marking the second devaluation within seven months. The official exchange rate, calculated in the NAFEX fixing loop, witnessed a 31% depreciation to 1,413 naira to a dollar on Monday, according to data from FMDQ.
The plunge in the naira came after the Central Bank of Nigeria (CBN), accused traders of manipulating exchange rates by under-reporting transaction rates. The CBN, addressing the issue, cleared all verified dollar backlogs owed to foreign airlines operating in the country, with an additional payout of $64 million.
Expressing concern over the economic challenges and the free fall of the naira, the Senate Committee on Banking, Insurance, and Other Financial Institutions has summoned CBN Governor Olayemi Cardoso for a briefing next week. Meanwhile, Bureau de Change (BDC), operators in Abuja and Kano have suspended operations indefinitely due to the scarcity of US dollars, citing challenges and accusing crypto platforms of influencing pricing.
FMDQ, a Lagos-based financial market operator, explained in a notice that the recent adjustment in the pricing methodology aims to address fluctuations and challenges encountered in the Nigerian Foreign Exchange. The measures are intended to ensure an accurate reflection of market conditions while upholding price formation and transparency.
International Air Transport Association Reacts to Devaluation
The International Air Transport Association (IATA) welcomed the CBN’s payment of verified dollar backlogs to foreign airlines but emphasised that airlines are still owed around $700 million. IATA expressed concern about the devaluation of the Nigerian naira, urging fair treatment for airlines amid the lower exchange rate.
GOVIMA reports that BDC operators in Abuja and Kano have suspended operations due to the scarcity of US dollars in the country. The closure is indefinite, with operators citing challenges and accusing crypto and Binance platforms of influencing dollar pricing. They call on the government to address the situation and consider measures, including a possible ban on these platforms.
