The Nigerian local currency Naira (NGN) plunged to a new low against the US dollar reaching 893.5 on Tuesday. Naira is experiencing a steady decline against the US dollar since January 2023. The currency was at 460 in January last year but doubled its losses in 2024 hitting 893 this month. The unending woes of NGN are impacting Nigeria’s economy as the currency is devalued in the global forex markets.
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Nigeria’s Central Bank Governor Olayemi Cardoso said in a statement that the Naira is now an “undervalued” currency against the US dollar. Cardoso stressed that the Central Bank authorities are undertaking efforts to rectify the development and bring the Naira out of the slumber.
“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side. We will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate,” said Cardoso to the Premium Times Nigeria.
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US Dollar Dominates The Nigerian Naira Since January 2023
The US dollar dominated the Nigerian Naira for over a year making the local currency tank to new lows. The NGN has now plunged to new lows in both the official and unofficial forex markets. When questioned about how the Central Bank plans to save the Naira, Cardoso explained that they aim to streamline and unify multiple exchange rates.
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The expected result would be a consistent and stable exchange rate of the Naira versus the US dollar. The move would foster transparency and reduce arbitrage opportunities, which would reduce simultaneous buying and selling of the Naira. “Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years,” he said.
Read here to know how other local currencies, like the Indian Rupee, are faring against the US dollar.