Why Nigeria Began 2022 with the Lowest Naira to Dollar Rate Yet

The federal republic of Nigeria started 2022 with the lowest naira to dollar rate due to the adjustment of the exchange rate.

The naira was adjusted by the central bank of Nigeria (CBN) to N413.49 to $1, thereby resulting in the trading of N435 to $1. According to the report, this might signal a new wave of currency depreciation by the apex bank.

The central bank of Nigeria, in the second quarter of 2021, depreciated the naira from N379 to N410 per $1. This was done after implementing the Investors and Exporters (I&E) window rate, commonly known as the Nafex rate.

According to statistics released by the Financial Markets Dealers Quotations, FMDQ Group, the naira closed at N435.00 to the dollar, the same amount the currency exchanged with the greenback. This happened as a result of the significant drop in foreign exchange supply.

However, over the last nine years, the naira, according to Bloomberg statistics, weakened on an annual basis, and this is the lowest drop ever recorded in the official market.

The state of the currency, therefore, remains unstable as the Nigerian Autonomous Foreign Exchange Rate (NAFEX), a fixing mechanism, had been fluctuating between 414 and 415 for the last three months before plummeting to 435.

On the last day of 2021, naira started at N420.67 per $1, hit an intraday high of N400.00 and a low of N445.60 and closed at N435.00.

Also, currency traders in Uyo’s black market exchanged the naira for the greenback at N560.00 to $1 and sold at N 565.00. On the other hand, Dealers in Abuja exchanged the naira for N 565.00 and sold at N567.00 to $1.

Godwin Emefiele, the governor of the central bank of Nigeria, in 2020, devalued the naira thrice, placing pressure on the country’s reserves, and has resisted requests from the International Monetary Fund (IMF) and the World Bank to merge the different values.

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