The Naira experienced a significant drop on Tuesday, hitting an all-time low against the US dollar in both official and parallel markets. The currency depreciated by 8.9% from Monday’s closing value, falling to N848.12/$1 from N778.80/$1 in the official market, according to data from FMDQ.
This sharp decline was triggered by a 212% surge in forex supply, which increased from $43.09 million to $134.8 million. The intraday rates fluctuated between a high of N700.00 and a low of N981.00 before settling down.
Simultaneously, the Naira traded at N1,050/$1 in the parallel market, up from the previous rate of N1,040/$1 due to a shortage in dollar circulation and increased demand. This even pushed the unofficial rate to N1,060/$1, resulting in a spread of N201.88 between the markets and a market margin of 24%.
Tuesday’s depreciation represents an 80% depreciation since June 13, 2023, prior to the radical forex reform of June 14 when the Naira traded at N472/$ and N768/$ at the official and parallel markets respectively.
Street currency dealers across Lagos sold it between N1,040 to N1,049/$ while the activity volume escalated to $234.28 million from $43.09 million recorded on Monday.
The Central Bank of Nigeria (CBN) had previously indicated its plan to operate a “managed float” regime and intervene when necessary. Tuesday’s depreciation is seen as part of this apex bank’s deliberate act allowing a free float of the Naira to bridge the gap between official and parallel markets.