Naira sets another exchange rate record, closes gap with black market, World Bank makes prediction

The Nigerian currency, the naira, set another historical record in the official market on Thursday, December 28, 2023, plunging to the lowest at N1,043.09.

The naira’s depreciation represents 16.35% compared to its previous closing rate, coming a few days before the end of 2023.

The naira has suffered the most volatility in 2023

The Nigerian currency has remained one of the most volatile currencies in the world in 2023 after the Nigerian government announced a new foreign exchange reform in June this year.

The current rate is the second time the naira has exchanged above the N1,000 per dollar mark in the official market.

The federal government set a new exchange rate target of N700 per dollar in the 2024 budget, a Legit.ng report said.

The Nigerian currency crossed the N1,000 mark on December 8, 2023, when it traded for N1,099.04 per dollar, a historical low in the official market.

The naira appreciates in the parallel market

However, in the parallel market, the naira appreciated marginally to close at N1,220, nearing convergence with the official market.

Black market traders said the pressure on the US greenback has softened following Christmas and New Year celebrations.

Aliyu Umar, one of the traders in the Ogba axis of Lagos, told Legit.ng that the naira is having some holiday in the black market as the pressure seems to have eased.

“We are seeing that there is not much demand for the dollar at this moment because of Christmas and New Year celebrations. We expect demand to increase in January, and people will return to their bases,” Umar said.

Market turnover drops

The current naira depreciation represents about N170.5 loss or a 16.35% decline compared to the N872.59 it closed on Wednesday, December 27, 2023.

Data from NAFEM shows that Intraday trading recorded a high of N1,235.65 per dollar, while intraday low recorded N720 per dollar.

Forex turnover at NAFEM stood at $83.63 million, representing a 34.63% decrease compared to the previous day.

Legit.ng reported that the World Bank has stated that Diaspora remittances to Nigeria will exceed $20 billion by the end of 2023 as total remittances into sub-Saharan Africa rise by 1.9%.

The bank revealed this in its latest Migration and Development Brief released in December, saying that the global remittances flows would continue to rise in 2023 but at a slower rate.

The bank stated that fixed exchange rates and capital controls were diverting remittances to the region from official to unofficial channels.